Success in Notes: Lessons in Real Estate Note Investing | Real Estate Notes Show

Episode: Success in Notes: Lessons in Real Estate Note Investing - Cayce Stone @CayceRealEstate Dave's Goals and Plans: - Been in real estate notes since 2008 - Working toward building note portfolio for retirement income in 5 years - Started learning origination side of notes in January 2023 - Provided discount link (save $100) for Diversified Mortgage Expo Nathan's Goals and Plans: - Organizing the Diversified Mortgage Expo in Nashville (3 weeks out) - Hosting two-day speaking event with optional Thursday networking and axe throwing - Giving away cruise as raffle prize at conference - Focus on bringing people together to build relationships for deal-making Key Recommendations: - Attend masterminds and networking events - your network is your net worth - Ask questions at events and masterminds - don't be intimidated or embarrassed about what you don't know - View notes as another arrow in your quiver - alternative strategy when traditional flipping isn't optimal - Learn from both sides of the business (note buying and note origination) for complete knowledge - Build relationships with note originators for regular deal flow Topics Discussed: - Lessons learned transitioning from house flipping to note investing - Value of networking and relationship-building in real estate - Diversified Mortgage Expo event details - Note origination versus note buying strategies - Overcoming intimidation and knowledge gaps when starting in notes - Comparing returns: flipping versus holding notes Guest Insights: - Cayce Stone flipped 200+ houses before transitioning to notes exclusively - Now originates 80-90 notes annually and holds 95% of portfolio (rarely sells) - Initial intimidation by notes was overcome through education and practice - Notes provide superior long-term returns compared to single flip profits - Important to structure notes properly to benefit all parties (buyer, borrower, originator) [Music] welcome back to another real estate notes show I'm your host Dave putz from jkp Holdings and today we're going to be talking about if we started over in notes what we learned what we would do brand new before we get there as always my host Nathan Turner how are you I'm doing great it's good time of the year the Sun shining things are happening side more and we got a big event coming up before we get into our topic at hand because I think a lot of new investors and experienced investors we'd like to hear you guys chime in today about what you've learned along the way we have a big event coming up that I I encourage everyone to get to it's not mine it's Nathan's can you share a little bit about that before we get started today yeah man we are so pumped we are three weeks away today three weeks out so this is the Diversified mortgage Expo it's where everybody comes anybody who's in notes or wants to be in notes anything about man go check the website but we've got anything from talking about creating notes how to make them profitable when you're going to sell them or just compliant if nothing else we're talking about market conditions we're talking about how to raise Capital we're talking about and biggest thing is networking yeah on top of all that networking which in this business is key to everything which will I'm sure and and we've said it so many times and it's still true this is all about relationships this whole business so it really matters who you know and who knows you so that's a that's a big deal we've got a lot of fun things too planned you know I was actually just we're putting together a poster I'll post it next week but I don't know if you even knew this Dave did you know this year we're giving away a cruise what no I did not oh yeah yeah giving away a cruise we have a Daytona racing game where you like sit side by side so we can get a champion racer we've got all kind of like fun things added into this because it matters as you do fun things together you get to know each other and we do business with people we know like and Trust yeah so the whole conference my whole idea for this is to bring people together so that you can get to know and like each other and start to trust each other so that you can do business that's that's what we want to accomplish is people doing deals yeah I think people missed that out right on what's really going on and you know besides the awesome Crews idea I think the fact that just getting together with each other even experienc people this is experience meeting experience exper meeting newbies and vice versa and everyone has a value to add to everything we do and I think people lose out on that in that you know Co kind of gave us this idea of hiding behind our desk and being interestes a little bit but networking was always a key to growing in anything you do is huge so definitely I put the list Link in the chat if you need it reach out to us send us email email hit us on social media we'll give you some links to the stuff get down there it's down in Nashville it's awesome the two-day speaking event but get there Thursday so just in case you want to network and there's an ax throwing event all that good stuff but just get down there and just shake hands and meet with people there's be a ton of information it's a must goto event and it's not thousands of dollars guys just get that yeah and on that note so you posted your link over in the chat there make sure you use Dave's link because you can save 100 bucks on your ticket so might as well save some money use Dave's link and get yourself there we're so pumped can't wait it's coming up in just a few short weeks yeah that's awesome so when we talk about this stuff we want to make sure that people get what we're doing right and this space is all about networking and and getting part of each other yeah but what we realized in doing what we're doing we're realizing that when we first started we didn't know what we knew and you know thinking back to now Nathan been since 2008 I've been 201 10 and it's a different market today than it was just 5 years ago 10 years ago 15 years ago and what what we learn along the way has been crucial but what we wanted to do this starting in January 2023 was we wanted to learn the other side of the origination world so they also start in a different way than Note buyers start right that the calculations the the the networking is all different right because if you go to a note buying thing you're not going to learn about note creation you're going to learn about buying notes and the calcul ations and figuring things out so what we thought about today to add into all the stuff we going on buying notes and all stuff is somebody that's been doing creation of notes this is a guy part of our private call as well is that done notes on a regular basis ongoing right and these are the people you want to connect with Note buyers that you can buy notes from on a regular basis so it's it's crucial ex except for Casey he's being very very stingy not selling any of his notes come on man yeah let's bring them in let's bring him in hey how are you man doing well doing well thanks I'm excited to be here and chat about it you're right Nathan I love holding them that's I love the notes too much to get rid of them it's my babies I get that no I totally get that and that's that's my goal you know is is that's what I'm working on now is building up I'm 47 this year I'm not that old but you know what five years from now I can be retired that's what I'm working towards right now is building up that note portfolio and you know retired but building up that nor portfolio so I've got monthly income that covers anything and everything that I need so I get it I understand why you don't want to sell but you know seriously let jump Cas how did you get started in real estate note investing did you come out of the womb having a house in your name and you start renting it out how'd you get started in this space I had five when I came out of the womb no when I when I first got started I actually wasn't doing notes I was doing more traditional flips and I probably flipped about 200 something houses before I had somebody teach me the better ways of of doing notes and and how valuable they can be and you know hindsight's 2020 I look back at a lot of houses that I flipped like man had I just made that house a note I could still be getting money on it and I only made you know 10 15K flip in that house that one wasn't a great deal but I'd have made so much more if I held a note out of that bad boy but yeah know I started off flipping I did that for quite some time mostly around the north Texas area and learned a lot I do think it was really helpful in my progression of knowledge to have a wide breath of knowledge of of what real estate can be once I learned about how notes work and how to I really want to hold assets not just sell them all and that's you why notes are so powerful for me and start learning about it I started doing slowly you know I would still do a flip or two and hold a note or two do a flip or two hold three or four notes and kind of just building up the note portfolio and learning the process as I moved and transitioned only you know into notes and now at this point we we solely do notes will will originate probably about 80 to 90 new notes this year and and just keep holding them accidentally occasionally we'll make a rental but 95% of what we do is notes yeah interesting cool interesting did you learn a lot of this stuff through going to masterminds classes R where did you get most of your experience and knowledge to get started all the above I do I couldn't agree with you more earlier that your network is your net worth right and and meeting with people and and going to masterminds and going to a variety of different groups and and just being a sponge of knowledge and information one thing I've always learned is you know ask all the questions you know I I want to be the guy there I remember going on the first masterminds I went to about notes and I was my hand was up constantly asking every question I could come up with and one of the other attendees actually ended up complaining to the host that I was asking too much well fast forward to today he he texts me weekly asking me questions on how to do things you know full circle but yeah I I definitely go to the events go ask questions and I'll tell you we all get excited and passionate we love to talk about it so you're not a you're not annoying Somebody by asking him a question like they we get excit I get goosebumps just talking about it you know let us go share our knowledge you know it is definitely weird that you know you go to a lot of other sectors people are hush hush and don't want to share you know we'll talk for hours about the same topic over and over again our wives are tired of it you know that kind of% 100% yeah and and it's and it's partially because I feel like there's somewhat of a bad stigma around notes if you don't do it right but if you if you learn how to do it right and if you learn how to benefit you to benefit you're in you're in buyer your borrower and all the different parties it it is such a phenomenal scenario and it is such a great opportunity for all parties and that's one reason I love talking about it to make sure that it is done right and to make sure we're not putting somebody in a bad spot and they benefit for years to come well you know a couple of weeks ago how long ago was that maybe a month maybe two months ago we had Kevin shortell on here and he was talking about you know notes as a strategy for Real Estate Investors and like just having that in in your tool belt just the knowledge of how notes work and how you can do different things with notes say you've got something that's tough to sell on the market you look at and you're like I'm only GNA make $10,000 off the flip what if I did a note what would that look like just as an option if nothing else just to just to expand your knowledge and your your different you know array of things you can do with the property yeah it's KN yeah 100% I mean it should be another arrow in your quiver right another way that you can go at the problem and solve it and I wish I had a lot of properties looking back wish I had understood how they work and and what they are and to be honest I felt kind of intimidated by them at first and overwhelmed and like I gotta walk before I crawl and you somewhat do but like they're not that complicated and once you once you keep diving and keep learning and keep focusing on it yeah I think we also get embarrassed of what we don't know right that's one of the big things we run into is that I don't want to ask a stupid question because then I don't look experiened and as you get experiened you actually feel more comfortable asking questions because you're like crap I don't know I need to know it are kind of fearful of asking a question what you'll find if you're new investing in this space ask the questions we all like jump over who can answer first right that's our methodology because we know we love to teach it's just you know we don't want to be Guru teachers but we love to if someone has a question we love to help and that's kind of the bread and butter what we do we help homeowners we do we do and and it's also fun now that having become kind of a mentor and teaching other people and how to originate them i a l i get asked a question I can tell people are timid and I can't count the number of times that I've rethought my process to that individual situation and proved how we do things because I was asked a question that made me re learn you know I'm glad you asked me I learned in talking about it you know it's phenomenal so when you first got started what would you say your first big mistake was and we'll go around the table here what was your first big mistake when you got started in notes in the creation can I come second what would you give two up two or three give me one of them that pops off your head like crap this was a big thing I didn't realize didn't know didn't understand that you know that I think people you know we just in the beginning we don't know we don't know but then it's like crap if I would have learned this earlier it would have been easier the SB in that if I knew it now what would I do differently and I'll jump in here real quick and say I didn't understand yield I didn't understand the whole financial calculation part of it and that you know when we first started the rule of thumb was Buy percentage of upb and Bo which at the pricing it didn't matter what the hell you did back then right it was it was a home run I didn't understand at probably four 20145 when things started to get a little tighter that I had to understand all those numbers that it wasn't a flat quick equation and I'm like oh this what the interest rate matters it does matter and that was a big thing for me Cas got a few what do you got Casey well and I I think that actually is really good because I mentioned I look back at properties and I wish I had made notes because I didn't understand how to use a 10 B2 calculator and figure out a way a note works and then once I got their their price you know okay great I know what my my Pi coming in is but what is my cash on cash return and not understanding really what that formula even does and it's really simple once you've done it 20 times and but knowing that that's our Focus I focus on cash on cash and Having learned that you know had I known that earlier there are deals that I did Flip or that I wholesaled or that I just even passed on and General because I didn't that house is they're waiting too much for it I don't know how to make that a deal and what I should have done is gone to my network and gone to my friend and say hey look this one I don't see a lot of equity I can't really flip it I'm just going to turn it down should I do that and then say you know what you could you sell her Finance with them or all the ways I can acquire it differently before I wrap it and resell it so yeah I I think that knowledge is very important there man what you got I have I got a few but so going back I was creating notes in 2009 2010 and 11 and a little bit in 12 but like that that's kind of how I got started was creating notes at the very beginning the thing that I think was probably one of the biggest mistakes is understanding the paperwork and just knowing what a proper note looked like oh okay we doing contracts for deed in Ohio they're called land contracts I was doing land contracts in Ohio so and we just pulled something off the internet I think which was okay but not really great so and and I didn't really understand what it was and it worked out anyway but it would have been good if I had a better understanding of of that paperwork and understanding how to get it together I mean and then other things like some of those first properties we sell our finance I didn't get enough of a down payment so it was a relatively small down payment we would do like we kind of backed into it so we we said like if the local rent is 500 bucks we'll charge you $400 a month you can own this house for less than rent was kind of our tagline me and Corey back in the day and it was I think we took it basically treated it like a rental so it was like first and last month's rent was your deposit so it was two pay two months worth of payment was the down payment that was not nearly enough to have you know qualified borrowers and then just learning how to qualify the borrowers I mean there was there was a few different things so I guess education is a big deal make sure that you get educated on that make sure you understand some of those things because you can make it up and you can maybe be okay but wouldn't it be nice to know how to do it properly the first time and one thing to piggyback on that I mean I have I look back at some deals that maybe I I even though I found the deal maybe I go give it to my experienced partner to let them run it so I can go see their paperwork because paperwork is so important you know even if I don't have to reinvent the wheel and get learning you know getting someone else's paperwork and going through it and then sitting down with them and saying hey can you just walk me through this like what is this daa trust like what who are the parties involved and and how does it work and and I'm I'm also we only do Texas so I'm very focused in Texas so every state does have different rules and laws and that is something else that you guys both deal a lot with does that change how you manage buy and your educ your learning process has to be steep yeah because we're doing it nationwide right in the beginning I was doing flat time frames flat this flat that and didn't realize that Texas is different from Indiana different from Ohio time frames cost expenses and then the one big mistake I made 2011 or so I literally went and bought a note foreclosed on it and totally forgot that there was back that the a there was back taxes and B it I figured one year taxes it it took 18 months so it extra on top of the one year wasn't part of my equation right so I I learned the fact that I actually had to look at the delinquent taxes because that was due at the auction that was paid first I knew taxes are paid first but it was like 5,800 I'm like oh I'll take 5,800 out was 13 Grand I'm like whoa what happened there it was almost triple and I realized that oh crap there was back taxes plus 18 months of tax not one year and each state each county is different right time frames changed and I didn't understand BK you know that would delay stuff and then it was you know at the auction date what do you mean it's not going to foreclose today I did remember yeah I remember doing a cash reys and I I did I didn't check title first so I didn't realize there was another lean on there that still applied that I then had to pay so that that hurt you know learn how does that affect people that who don't know why why not just do a de L and get cash keys and and if there's no lean on there yeah so I you know somebody's living in the house they are willing to just take a payment to leave so I pay them whatever it was thousand bucks whatever they agree to just leave instead of doing going through a whole foreclosure and eviction it's a really great way to go except that I didn't check title to see I forget what the lean was there was some there was an additional lean that then fell to me and I I don't remember the amounts or anything like that there was years ago but yeah but the lesson learned was check title because that will tell you if there's something else outstanding that because they just gave the house to me we didn't go through a foreclosure that would have wiped out some of these leans I then inher that's the big one right there right if you have another lean it's not a problem but you have to foreclose on it right right and get that rid of that second lean or whatever lean in Florida you can separate it and you know foreclose on it take it back you can actually do de lo yourself and still foreclose and wipe it out but yeah you it's crazy I I had a similar it's funny I had a a couple that purchased and the wife had unfortunately passed away but we need a cash for keys for him to get the house back but she when never cleared her off title we didn't realize till later when we were going to resell that we created kind of a pickle because we didn't we didn't pull title and didn't know the process I should have asked more questions of other people right yeah and so let's let's talk about when you first got in what kind of due diligence did you you know house due diligence or property or borrower what kind of due diligence do you know now that in the beginning you messed up on it may it may have affected a deal May affected a profit whether there's something you do now that you didn't do when you first started that you wish you knew if you started over yeah I mean there there there two sides for us right it's how we buy the property because we buy the property we we take title and then we resell it to out to a new Homestead buyer and so they due diligence on both sides of that equation are are Paramount because when we're buying the home you know understanding all the leans all of the debts all of the situation of what's going on getting a clear title can be complicated I had one three weeks ago that had 26 airs and two of them were in prison that we had to get to purchase so it get it gets complicated and knowing how to solve those was was tricky I think the for us now we mostly buy subject two or a combination of subject two and seller financing if they have Equity I would say the biggest thing that I've learned on that side of the fence is that I don't want to be a motivated buyer okay if the deal works then I'm gonna I'll work it but I'm not going to be motivated where I'll overpay or I'll force a situation that really I know I shouldn't do but I just want that house for emotional or whatever reason I've done that where I bought a property that I knew it needed more work but I could probably do it I was going to force it and that ended up just killing my cash on cash in my return and I I've definitely learned that side on the on the flip side when finding our Homestead buyer you know Nathan said it not not doing the right underwriting of the DT of their DTI knowing who is getting into this home because it is a long-term relationship with them and and and not doing that underwriting correctly and not knowing what I didn't know on what to look for at expenses that they had and what other debt they were you know into their DTI to go through it we do a a soft kind of underwriting before we go through our rmlo now just to filter out a waste of time type thing and knowing how to do that process efficiently is really really helpful and that's one something now that my vas do is they go through and do that soft underwriting for our buyers but we have a very defined set of criteria of what we collect and and how we go through that so we don't we don't make those mistakes yeah knowing doing making sure that it's the right buyer saying I don't be a motivated seller you know I buy from motivated Sellers and I sell to motivated buyers I don't want to be the opposite on either side you know right and then that knowing how to not let my emotion affect that decision I want to get this house sold and that's other thing I I feel like I used to get nervous I've had this house on the market for two weeks and I haven't sold it oh my God and I'm willing to take a lower down payment or I'm willing to you know do a little bit less you know what hold the line just hold the line for the right buyer and and do it because they're out there you just got to find them and do the right marketing to find them yeah yeah absolutely absolutely man nailed it and it's you know it's interesting going you start talking to note buyers and or note creators anybody in notes you start talking about where they came from yeah we made all kinds of mistakes and luckily we've made it through that and we've figured it out but I don't know you know on the one hand realize we're not super human yes just we we went through the mistakes just like everybody else the other thing is man some education would sure be nice so you can skip some of those things and and you know Dave's got a program and and there's lots of other ways you can learn the business but it's worth paying a little bit of money up front just to understand what you're getting into and how to I think that was going to be my next thing is when I first got started I didn't pay for education I was working at a fund had some great people around me they were buying tons of stuff I didn't pay for Education because I didn't think I need it and what I back to we started before one of the big things I missed out in that paying for education is the network of other investors who were part of it I can go to I had to break into sectors like Nathan and stuff like that because who's this guy coming in there was only a couple trainers out there who's this guy coming in where does he know and I didn't I didn't become part of that you know formation of networking for housing you know one of the things I learned was you know when we look at houses is we need someone eyes on the ground right you need someone to experience look at stuff I remember looking Google photos one of the classic stories I had was we looked at Google photos and we're driving down the road and we just happened to call an agent the local it's just drive by and the house was gone happen to be the Google photos we then turn the corner and the front view was the house there when we turned the corner it was a newer photo and turned around and the house was demolished we were probably looking at the same one oh yeah Florida right like holy goodness's Ohio so that a different one but same situation wow this picture and then you go around the corner and it's an updated picture and there's nothing there yeah it was a Universal Studios prop wall yeah exactly so let's let's move to you know you know going through owning the asset what did you do in the beginning when you own the asset that today you'd say crap I wouldn't do it again right is it your processes is how you maintain when you have one or two notes it's pretty easy to kind of maintain stuff what would you would you do your would you do what you did before over again and if so what was it or what would you do differently yeah M address me go back to your thing on that real quick too because I do think the Education and Training is Paramount but one of the benefits of a network is that when you are in a pickle situation because they happen to everybody you have someone to turn to it's not just the initial underwriting I have a note from three years ago and I'm running into this scenario and having experienced people to turn to at any stage of the process is really invaluable because we've all made mistakes that have cost us thousands of thousand and learn from my mistakes don't go do them yourself yeah but you know as as I mentioned when we when I got started I was slowly getting into notes because I was still a lot of flipping and so I would buy some you know some properties turn them into notes I'd hold one or two and I would learn a little bit as I was doing it I like that approach because I had the the pops of cash from doing some flips to keep things keep things going and that was helpful I have a lot of wholesale friends that have try doing the same thing do a couple of wholesales and then you know hold a note here and there and I think that's that's a nice way because you can kind of learn a little bit when doing it and and that was helpful for me I also I'm sure you both of you know the invest in debt by Jimmy Napier y one of my books I've read twice and I don't like to read I'm the type that listens to an audio book buys the hard book and puts it in the Shelf to say that I read it so yeah I actually read that one but I made my whole team read it my whole company has read it to be on that board but yeah difference in small notes you know I have definitely brought a lot more things in house that I used to Outsource so I also own a loan serviceing company that I don't manage dayto day but I own it and so it lets me help with improving processes on maintaining our borrowers so if you start all over again would you do what your system was when you started again yeah I would I would probably I would definitely still slowly getting doing a couple because I didn't I was also originating them so I wasn't just you know buying the notes so I would I was also doing marketing directly to sellers already because I came from the flipping world into this model I would do it that way if I was coming from the flipping world then I Pro I might not I may because flipping is not something I encourage people to do to be honest it's much high it's it's high risk especially in a volatile Market if you do it right it can be phenomenal but but yeah since I came from that world I think it was good to slowly kind of move in that direction and I and I enjoyed that I also a lot of things I like to do like Loan Servicing I used to work with a completely third party loan servicer and I I think that was good because I I saw what they did I learned this I I like some of it I didn't like others I thought I could improve it when I got to about I don't know 15 20 notes I we we brought it inhouse and I I think RI stands for real reimagining expense as income and I brought over the servicing side and so it's under our privy but now you know we do things when we're we're selling a property we help them file their homestead exemption because I want them to get their taxes as low we just did a campaign to all of our borrowers about protesting their property taxes to keep their taxes low because I want their TI as low as possible so they always pay that and another thing I I think I've I've learned along the way didn't directly answer your question though but is I want to be a friendly lender I want to be super nice to our borrowers but there's a point when I'm not helping them by allowing them perpetually get further behind and I used to feel like I was doing them a favor by letting them they' get a payment plan and they would break it a month in but we do it again and all a sudden you're you're multiple months behind you know when someone gets two or three months four months behind they're not going to get it current you're really just making them in a wor spot right and so it's you a lot of times we we have the Mantra of your it's a lot of times like you know children you're trying to help them do what's best for themselves and so we we do payment plans but you get one a year and if you break it it's back into you know back into the foreclosure process I mean we're we do that because it's no no reason to just keep kicking the can and make it worse for themselves so I think it's that tough love has actually been helpful because we since we started doing that we have fewer deficiencies and fewer people behind because we are on top of it and we don't get out of side out of mind but it's also easy some of them another thing that we do is we we we allow our borrowers to pay weekly some of them they can't manage monthly so you get a check on Friday they make a payment on Friday things like that so they don't they don't get behind because it's constantly aing from their account cool that's good that's good I've been guilty of that too where I'm trying to give them Second Chances third chances fourth chances and and I'm not helping and I know it seems like you know I'm trying to be nice I'm trying to be I'm trying to be helpful but same I I kind of came to that realization in fact I remember talking with a friend of mine years ago and you know I said you know I hate being that guy that is you know G to for clothes on him and whatever and even then I rarely for clothes on a person it's just an empty house but he said no you're thinking about it wrong he says he say the way to think about it is you're you're holding them to something they've already agreed to that's it so they've already agreed to these terms you're just holding them to it I'm like yeah no that's exactly right the choice there was agreement if this happened then this happened if this happened then that happened right and I can help as much as I can but when you first started Nathan those systems you have in place now maintaining the assets would you did would what did you do in the beginning would you would would you do the same thing over again and what do you do now I I mean in the beginning it was it was a spreadsheet I probably I no not probably I definitely I did that too long where I was up to around 50 notes and it was a spreadsheet and it was like colorcoded so like yellow was something I had to watch and and make sure I was on top of red was something I had to do today you know Green was fine I didn't have to think about it for a while that's a terrible system like it was it was fine for the first dozen notes or so but that gets out of hand very quickly so there's actually friend of ours Adam Adams he's the one that hooked me up with pipe drive and helped me set it up and that's I still use that today and even with different businesses so going from the non-performing model to now a performing fund model I still use it to keep notes on everything keep you know just on top of all the different notes just to make sure nothing falls through the cracks so I waited too long to get into that I would say like you said Casey after 10 20 Max look at some kind of software whether it's pipe Drive Salesforce I don't know whatever anything I'm a nerd I live in Salesforce I I I subscribe to the the nerd hat but I I agree with you though and I do think it's important to have some system but that system will evolve over time your spreadsheet works for a while and don't over complicate it right you know you just got a few do what you what works for you're gonna naturally start to see things that you want to do differently better ways you want to track it you get stuck and go listen I need something better than this yeah I totally agree yeah well you'll see something broke in the process and you need to improve the process and I I think that's something that we've spent the probably the last 18 months to two years is really focusing on processes and systems for all aspects everything needs a process to it and but they're ref and they're always getting tweaked it's you're never done that's part of owning a business you're always overcoming the next hurdle you know and that's part of the fun but don't ever don't let those hurdles be too intimidating and scary you can overcome them they do get a guide a mentor a helper to do it but they've been overcome by by people not as smart as you you know for me you know I I was allowing services and servicers and attorneys kind of send me multiple emails and I got lost because I didn't know what happened before until the point where I said listen I can't do this we have 15 emails about the same subject because they created a new one I need that thread where I can read back and go okay what happened here there yeah and even with like you know pipe drive if they send you email it's another thread in your email thread it's like I need just that one thread of details and make sure they put this you know the note number or the borrower name or some kind of retrospect that don't just send me an email like hey update here and it it just doesn't work because update mean to what asset right I would think that when you first begin is what I would do if I would get over is really kind of make sure my services all of them are are way that works for me the best and say listen if you're going to send me an email please email me on this thread and make sure you include the loan number or whatever number works for you and kind of keep that in order I agree to you guys start with the spreadsheet organize stuff get things done manually so you understand it so you want to hand off to somebody as an assistant or a VA or using the AI as we talked about the other day you need to understand the manual processes and understand when things go bad so you know what to fix you may never need to fix it so don't go out and buy sales fors or pipe drive if you may never own more than five or six or 10 notes just be simple in the beginning absolutely so in that process and for me working with these attorneys and there's a lot of people they come in play even with performing notes you deal with some stuff there's a lot of people in play just have some way to know who is involved in this asset at all times you want to use a spreadsheet that's fine pipe drive has contacts they know who you should reach out to who is the the the service or you know contact person there who is this person that person so when you need to reach out to somebody you have a contact and you're not searching through emails that's something I did the beginning that wasn't that good I just haunting for stuff yeah yeah I think that organization you have your own process and your process has to work for you it's funny you said that last week we do a team training within the business and I was actually training an organization of a couple things and I came to realize this is how I like it organized but that might not actually be best for this other team so the objective needs to be the same but if as long as you're on top of it and organized have a system that works for you and it will it will grow in scale as your needs grow but don't over complicate it and do too much too quick that's very there's actually a lot that I use now through Google so like Google Calendar I'm using it way more now than I was five years ago yeah it's amazing stuff gets on there you know when you use the Technologies of around you right your email your calendar things get easier and simpler for you just because you're not realizing everything you have to manage is on point to you know make a to-do list every morning right and say okay I do this this and kind of manage your time the calendar is a simple tool that you all have on your phone your thing have it set up and start blocking out periods of time and your day for certain tasks right if you're going to check assets Nathan has a great strategy he has certain days for certain things but I'm going to review things on this Wednesday block it out because I'm going tell you in the beginning I would look at something for two or three weeks because I just forgot yeah like crap the email came through and I I never went back and followed up on it so that struggle was that I'd like to hear from those in the crowd I know we have a bunch of Twitter Facebook all stuff again this will be live streamed on YouTube and podcast we'd love to hear back from the crowd like what kind of things did you learn in the process and if you're beginner what questions do you have that we maybe can answer thinking back to when we were First beginning of what we would done differently or maybe you know today's world we're just maybe because we've done enough we do it differently now but we wouldn't have done in the beginning like Salesforce I would never recommend anyone or pipe drive to go out and go grow that thing in that system yeah don't start with it yeah make sure you understand how you work first what's the process that works well for you and then find a software that can back that up yeah so the next part is you know when we exit a deal it's often not what we thought when we first bought the the note right or create a note I'd like to hear some stories about your first problem that you when you finalize a deal what went wrong or what would you do differently now that would have prepared you better for that or maybe something you would have put in place to protect protect you what you do now what did you do in the beginning that you did could would do better now that maybe your first two or three Deals something went at the end of it and you're like crap that Aro or that performing Noe or you know structuring a j deal even like what would you do differently now If you restarted today Casey what are your thoughts well again I want to go back to one you said a second ago after that I you know you mentioned having a good system I my wife always asked me morning hey what are you doing tomorrow I don't know what on my calendar like I I've intentionally don't try to remember a lot of things I have a process to remind me yes because I don't need to internalize it I'll drop it if my whole team knows if they want to meet with me it's got to be on my calendar otherwise this is not going to happen same thing with my day-to-day tasks and calls and things it's all in my CRM I don't know who I'm calling that morning when I get to my desk it's in my system Y and my my thing that I joke with that people ask a question is it in Salesforce because in we know otherwise it's not happening have a process I totally agree you know two things that you know exiting deals you know we hold our notes we don't really sell them I guess we do get some back when we have to go through foreclosure I had one recently where we didn't do the paperwork right initially because we we only looked at the paperwork the DEA trust and the note both were standard but they weren't as comprehensive as needed and we had to foreclose and when the the borrower moved out end up leaving two RVs and a a mobile home on property but we didn't have personal property listed in ourida trust so we couldn't dispose of them we couldn't get rid of them and it took me a while going through a court system with our attorney to be able to get those through the DMV moved over and Etc ETA but that slowed down my ability to flip that back into a new note and get these things off my my PL and so again and I looking back I wish I had said trying to come up my own paperwork gone to some people into a network to get those get some of those things yeah most of ours again my disposition on them is the getting into a note so I would I would definitely say correct underwriting of having the right buyers is so important oh another thing that I would say I've had some people that are in my shoes that when they're selling them they'll go and let their their borrower even Finance their down payment over a short period of time or do something super creative to help them get into the home and that only bites everybody in the keyer later that that's not a good answer because they can't afford it and you know I know you think you're helping them again I and I've had friends do that that you know in a pickle later so yeah I definitely knowing who is in the home and waiting till you have a right a right borrower for us because we're originating him yeah you know because you're send people for failure right and it just causes more headaches later and you rush to do it because you I got to get this sell sold and want to buy let's go for and the end of the day you're resell anyway you have to for clothes on them and the whole process and you're kicking someone out of their house it just yeah doesn't feel good you no we wouldn't do with our children while you doing with borrowers Yeah you mentioned that point too on how it feels bad having to Fore clothes on them but you know I have had a borrower that we had to do that on I'd say about two years ago and then I talked with her about a year afterwards and she said you know I was really in a house I couldn't afford I thought I could life went crazy and you actually forced my hand and I'm so amazed at this conversation but you my hand to go and move into somewhere where I was saving money and she moved back with family temporarily got a clean start and moved on and I'm like you know I think of that now and that we had we just kept kicking the can she would have had a bigger you know foreclosure immediate or inevitable anyways so letting us to just do it earlier that was one of the epiphanies for us that you know we'll do payment plans we're going to be flexible but if you don't do your terms and you don't agree to it we have to move on yeah so Nathan What would what you learned when you finish a deal and you say man I should have done this I should have done that or you know what could you done better in the beginning that you you know now that those first few deals where we were trying to resell them like I say our paperwork was just not right it just it wasn't correct and so when that was a big stumbling block trying to sell those first couple of notes is just and I think you know partially we didn't know what we were doing partially we were trying to be creative we were doing things like you said Casey like the down payment they couldn't afford to lump some of it so okay that's fine your first six months of payments will be this much and then after six months it goes down to this we'll count that towards your down payment cool stuff very creative But ultimately not helpful so that was that was the biggest challenge right off the top excuse me was uh was yeah just making sure that paperwork is correct for that back end and something I hadn't even thought of nothing I would have considered before I was creating those notes yeah and we're running into to that today where people are creating notes and now they're trying to sell them and we're going oh man this paperwork is a mess it's not that it's not sellable necessarily but you're probably not going to like my price yeah because I am gonna have to discount it because I'm gonna have to take some time and energy and and legal resources to go and fix that yeah and another one that I think I I learned when originating them is that we used to try to really get as much as we could from this person the borrower and you know they they have 15 total their checking account we're trying to get the 15 is down and um that's not good for them and it's not good for us and we really do and we tell our borers now our goal is not to drain all the money that you have available because a moving is expensive y all their setups and getting utilities and all that stuff and I we used to have a year ago new notes would always have a dip they'd start off a little bit behind and they end up getting current because they were unexpectedly having more cost in the moving or new furniture or whatever so now we're like you know what we'll go ahead and take 2500 3,000 whatever it is a little bit less on a down I want you to not be late when the mower get starts in two months I want you to have money in your pocket because I want this to be a long-term friendship and not trying to be taking you doesn't help anyone yeah yeah so for me you know when we took back a property and learned REO stuff I didn't realize how big an importance of the area was for me right I was looking at tapes and saying that number looks good but and I didn't realize like the area of the property was a key thing right we bought in properties that areas that looked good but I didn't really understand the area right we're a lot of us were in Columbus Ohio when we first started it was a big big area for no buyers whatever happened but there were different sections of Ohio that's more attractive where yeah the value of the property is good here but if you get over here it's even better so sometimes you pay up for a certain areas we had some properties where we then couldn't sell it because it was in the bad area and even though it was you know it is what it is I just didn't learn but it also had the flip side we bought a property in New Jersey Tron where it was on three streets that were the highest value of the entire city we just happen to get lucky but I realize the fact they start diving in understand the local area was a key thing for us because there are plus and minuses of every area even if it's in the same city it's really interesting we've seen pictures also where the front of the house looks beautiful and the back half is gone like the whole house is gone and not really getting a foot on the ground and seeing the property is essential and understanding the process it's crazy what you don't realize so I so how do you do that Dave how do you how do you get that local knowledge without being local right so's a couple different ways when you first got the notes the biggest question a lot of people say is but I don't want to buy outside my local neighborhood yeah and then my reverse question is would you be you know if someone came to you and asked you about your local neighborhood would you be able to tell them absolutely so what I started doing is I started networking with those people who are either a a note buyer or B people who help me normally so I'd go back to the person who helped me sell an REO and say hey what do you know about this property over here and they had a wealth of information there are local REO agents who can do the the the the reing the winterization the trash out they knew their local market much better than any of us would do it right I think for me it was I learned to use my network that I already built of Ario agents to say Hey listen would you buy this property and the answer is well yes or no and they go why and they say well you don't understand this is happening over here there's a huge thing industrial problem going on I'd be careful with this and I started learning about this stuff and they can go locally and check out things and sometimes they even knew the house we're like oh man watch out for that problem right we looked at the house one side someone died in we didn't realize there was a murder scene right we just didn't put two two together you're like oh really and you have a ton of local note investors who you could reach out to across the country most of the time in different counties say hey can you just do a driveby or let me know local area you're more than likely easy get on the phone and ask questions they'll take five minutes and to say yes great area bad area this is the value it's really awesome so we saw a sneak peek a little sneak peek coming up later this summer we've got someone a special guest coming on where she's going to talk about the network that we can tap into together so that I'll leave it at that but it's a huge Network Nationwide very valuable we're excited to have her come on here in a couple months Bernard Bernard mentioned on the zoom on the Facebook feed I think that he set up Zoom calls with people to see local properties that's also idea yeah absolutely one of the things I love about what you said is that when you ask if they would buy it or not you followed up with why and and the one things we do a lot on our team is ask all the questions you can possibly come up with keep asking questions there's always more to learn we we occas we buy anywhere in Texas and so we buy in the tiniest of town but I have one thing I've come to learn over time is I have to account for that in my whole time to find my en I've got to buy it better so that I can account for a longer hold but we we use a serice like weol look but it it work wegolook.com Works in some areas and some it doesn't we now have handy people in different regions but yeah you definitely have to know the region I bought one down by the coast and I thought was an awesome little property and I was super excited it took me I don't remember five six months to find a buyer because it was a small town that had three people wowow but they they all did know who used to live there they knew the whole backstory so it's funny I definitely see another thing and again I'm I do a lot when I'm buying them I've learned a lot about septics and well Waters and stuff like that has been a bit of a a pickle a few times yeah I sold one and I we buy side unseen frequently for physically seeing it we get a lot of photos and we we're going to resell it and we actually sold it and then the buyer borrower calls back say hey we had our water tested and it's just not not good and we we our seller we bought it from you lied and misled us and that was my fault for not doing the due diligence yeah he can lie and do whatever but I'm the one accountable so we had to fix that process now but we had a $30,000 hiccup that we had to go put a filter on that because apparently this well in this part of Amarillo is just dangerous and I can't let someone live in a house that got unhealthy water that's not going to happen yeah but learned a big less than that one and so I should have gone to others that have done properties in that area and said hey what do I not know about buying the rural parts of the around the city but now I know yeah so the next question I have for you guys is what was something you learned that you could never prevented and you just didn't know even if you put everything place you just didn't know right you wouldn't have been able to solve it maybe you can't ever solve it but what would be something you you know I have one come to mind that you know it was something that I learned along the way there was nothing I could do about it it sucked right and I have a situation where it did come up I now have something in place to prevent it but you know a lot of times people are afraid of what can happen and they don't they're afraid of what they don't know but sometimes you can't solve that problem and there's nothing you can do do you have a scenario Casey that that you ran into that even today you don't have a answer for that you just said crap I can't prevent that from prevent that mistake from happening and to learn from it we have a lot of mistakes I mean I think when we do go and have to get a house back and it's been into a very bad shape it's something I really can't prevent Y and nothing I can really do about them it's part of the game that has bitten a little bit a couple of times but not super common I usually get rentals in worse shape back than I do yeah but so it's not a common one but I do I do think that most problems we've been able to mitigate the risk but know as much as we can I can't think of a good example sure well we can go back in it right Nathan do you have a scenario that I have one in my mind that we both have we probably not thinking about is you know we never can predict what a note's going to do yeah a performing note a non-performing note we buy a note that's performing and it defaults right and then it we can't control that we can't control a note and what happens if I bought a great note that I think is perform forever and it stops performing I have no control over that and there's nothing I can put in place to hold that to be true all I can do is calculate making sure my offer takes care of all those scenarios yeah right yeah and then I was thinking I I totally agree and that's people are weird they've I I've been surprised at you know the direction it goes where that doesn't make any sense and there's no reason it should go that way way but that's the decision of the borrowers it's people you know you're foreclosing with equity for those who don't know the houses you know owed 50 Grand it's worth a hundred why am I foreclosing it why they selling it yeah sometimes we don't get it right like Casey said sometimes the housing condition we can't control and we can't get inside to look at it yeah right that was the one I was thinking of is especially on a non-performing note I don't know you know there's a very high chance that I'm going to take that property back on a non-performing vacant property that's very likely this this scenario and I can do my best guess of what the inside looks like based on the outside conditions but I don't know I don't know for sure and we can get in that house and all of a sudden there's all these problems that we just could not have foreseen uh we can make some guesses and some fairly educated guesses but we can't know for sure until we get that back casy the story sorry the story that came to mind for me in burn in Texas which is a small little town I got a house one the first ones I did I got the house back they we did a cash for keys and de and Lou he didn't want anything to do with it we go out there to find out there was about a three and a half foot hole in this roof that had been in been raining on how long that had been open it just caused all kind of molds and damages throughout the house that wasn't wasn't expected luckily we bought that one right as you said a minute ago we bought it very right and we could we actually turn around and resold that as is but at like 25% value to someone that's a he's a rehabber he wants to live in it he's going to fix it himself like you go for it buddy able to find a creative solution to that problem without pouring a bunch of money in it but definitely an issue we usually can we can usually find some some work around you can't yeah so Casey what was your worst deal and if you could start it over again what would you do differently if anything to prevent it from going bad it's the worst deal I had was not a note but and and I I'll say that what I could have done to prevent it is you know trust but verify and I took someone at their word that they were going to cash pay for a property and we were going to close outside of title again I thought I was doing a friendly favor I thought I was doing you know my view the right thing to help someone out and he was lying left and right and unfortunately that has now tainted my ability to just blindly trust and and now I didn't have it papered I kind of had the old handshake trust Theory and it literally went through Court we're looking at text messages to prove my case like it was a problem on about a $1.3 million house and yeah it was it was an ordeal and but I didn't have it P and correctly and I and I think that what I should obviously should have not just taken his word but but and I think something you said a minuto too I think anybody's been doing real estate long enough has had bad deals you've had bad deals and I think that had I heard my story before getting started I might have been scared but but don't be scared don't let that be intimidating I and I'm glad that didn't scare me away because we could learn and improved and and did better but bad things are bad deals are going to come apart it's a part of the learning have people you can turn to and a network to learn from but it's part of the process I don't care if you're flipping or whole you're going to have bad deals and and it it shouldn't be deterring it should and you're going to have more hard you're going to have more bad deals in your business right it's not it just right just changes right so Nathan what would we've talked about this a monthly you know what would you done differently in one of your clinical bad deals that prevented from being bad I got one that's still not done that was I talked about this one a little bit still not done this one in Chicago that I've got where first of all Chicago that's and just Chicago is just a very difficult place to to work in for all kinds of reasons on every level honestly and so yeah the mistake was I finished a foreclosure I took I the only reason I bought the note is because it was already in foreclosure it was about to complete so I'm like good it'll be you know fast easy deal very predictable I know where it's going until we got a squatter and that was right as Co was starting and then she just very much took advantage of that actually two weeks ago last week my uh my attorney sent me a clip that she had posted on Instagram where the judge was actually kind of going off and she just took a little recording of it and it was good because he didn't talk about the names or addresses or anything like that so it's okay he was just going off and talking about how this lady is a professional squatter and you know on and on and on and on it's it's pretty funny that you know the judge is up to here with it you can imagine how we all feel but anyway the judge is like this is ridiculous still not done and she's still not out we uh actually had a court case I think it's today where this should be the nail in the cough and this should be the the end of it but she's very successfully dragging it on and like literally beginning of covid so she's been there three years hasn't never paid a dime and still not done so how would I change that it goes back to the trust but verify like Casey don't buy Chicago don't know about Chicago but but it all started because she expressed interest in buying the house and said that she would go in and start doing some work on the house why did I say yes to that she was not a licensed anything and you know that's that was my big mistake is just saying yeah okay go for it so my worst mistake and then we'll get to Nathan's last question is you know my worst mistake we've mentioned our worst mistakes on the show and I'm gonna bring up a different one there's a deal in Miamisburg if Tim's on right back in 2011 that I didn't trust my gut saying buy it and end up being a Kill deal right it was a deal that because I just didn't but guts said bu it and I just got scared and was we're newer 2010 2011 2013 13 around there it was just we got scared and we shouldn't have been scared we should have said okay the numbers look good we bounced off a few other people and everyone said yeah great deal go for it and we got nervous and didn't buy it and it was a killer deal we should have bought it and it was just the fact that we didn't trust our Network and our numbers saying this is a good deal and I goes back to the fact that you know if you have a good deal you can bounce it off of other people and say what do you guys think of this and if multiple people say it looks good go for it so was it because the numbers were too big or you just didn't have experience with that or it was experience and it was it was a bigger note I think the houses it was a note was like 60 it was a bigger note for beginners but it was like 250 value it's like is it this it was too good to be true kind of scenario and it was we getting sold directly by the person who owned it and it was like a one situation so no one else saw it and I just didn't go for I don't know why and we look back and go man I forget all the numbers but it's like we should have went for it and it was just the fact that we didn't trust ourselves and the people we talk to like this is a great deal go for it and it was just nervous because when you're first beginning you're nervous about everything because you just don't know what you don't know so I hope this this this episode here guys helps you guys learn a little bit about the problems that we face and what we would do differently if we started branding new in the space and go through it I think it's been really helpful just sharing the different perspectives as well as Casey's idea from origination side right he didn't know but arow and things like that but the education gives you that knowledge and your network for us it's learning about different scenarios because one of the things you learn is just because you are in the space your deals are always different from everyone else's so you may do a 100 deals and never see one situation it just happens so that's why your network is huge to hear about their stories learn from their perspectives and things like that so go ahead Nathan Lee take it away all right Casey this is the crystal ball question so we want to know so you've done this for a little while now and now you've you've kind of got your processes now and everything else this isn't white out this is real what do you see coming down the pipe especially on the origination side where you're at in Texas are is it increasing decreasing and what do you expect to see phenomenal question I definitely was reading the other day about you know the supply being increased here in Texas more and more Builders adding more and more homes so my reselling of homes I had a little bit hold longer hold time I like the interest rates are higher it's easier for me to sell at my rates when Bank rates are higher so I don't I'm I'm happy about that I'm still I'm still taking over a lot of homes that are covid or prior type loans and so you know it really allows me to take over a low interest which is which is great I see that continuing I think you know that the uh the whole times are going to probably keep creeping up a little bit but they're not going to get out of control here in Texas we have a a pretty good demand across the board prices you know AB it increased the amount that we can do on property taxes not long ago and so that's helping bring down some people's Piti which is helpful for our borrowers and right now we're moving into the summer which is a phenomenal time so you know we've been we've bought five houses this week and we're probably we've been buying incredibly fast and and I think it's it's easier for me to buy than sell always at least quick I can contract and be closed in 10 days to buy a house but it usually takes me about 45 days to sell traditionally just depends so I I do think that we focus more on a little bit bigger cities than we have in the past so we do have a little bit lower hold times because hold hold time is what kills me because I'm paying marketing I'm paying holding costs and mortgages Etc so I'm all about I care a lot about the whole time and I do think that we're we are also going to be a little bit lower on some of our our interest rates when we're reselling them because I do feel like the economy is slowing a little bit for some people having a harder time handling some of their mortgages so we're we're willing to set it we typically if it's under 200 we're at a 9.99 when we resell we may come down to a 95 which you know sound like a big deal but it kind of is yeah and I I think we'll be more quick to do that than we had in the past we won't start off there but you know if it's not moving at a month month and a half I may start be looking at my interest rate just cuz I do want to move through them and not try to all the you know water out of the cheese or whatever that old saying is yeah are you using agents to find their borrowers or are you finding them no we do all of our own marketing to find our own buyers ourselves we don't use agents to buy or sell we we use a lot of Facebook I spend almost as much on Facebook as I do Google ads to find our our in buyers and we we use a couple other you know sites to get them out there but yeah we we we do our own direct marketing to sell to buyers that's awesome awesome good deal well Casey I I know people have your connection I'm sure you'll get emails from people people asking questions about you know your experience your knowledge know who are originating and whatnot case is weth of knowledge we've known him for about a year or so now plus he's part of our private group and all that stuff so it's awesome to have that experience and knowledge and just the Insight of what it's like to begin right we all started from somewhere and it's hard to begin it's really difficult but once you get breakthrough it's it's a joy to be part of it well Casey I thank you very much hold on for after hours for us for a few minutes for everyone else we will see you soon we'll be on before we're going to do a call before DME if not we'll see you down at DME so stay tuned and we'll see everyone soon.