Wayne Garrett's Journey from W2 Engineering to Note Investing | Real Estate Notes Show

Episode: Wayne Garrett Talks about his Journey from W2 into Note Investing ‪@notefellowtv7576‬ Full Video Dave's Goals and Plans: - Looking for new investors and new notes at conferences and networking events - Branching into seller finance and owner finance world in 2023 to better understand that market - Teaching owner finance originators how note buyers think and the right ways to originate - Speaking on a panel at an upcoming conference on Friday - Shared a chart in Facebook group showing P&I payment to home income has surpassed 2006 levels Nathan's Goals and Plans: - Will be traveling to an upcoming conference Thursday night - Working privately with originators to find assets outside traditional hedge fund purchases - Focusing on cash flow and yield in owner finance notes as the best market opportunity currently - Expects a market downturn is overdue since 2019 based on economic indicators - Planning to have De Polio from SN discuss new note investors bidding incorrectly on assets Key Recommendations: - Network with both note investors and originators at conferences to source capital and notes - Build relationships through casual conversation rather than transactional pitch approaches - Focus on owner finance notes for cash flow and yield rather than traditional hedge fund purchases - Teach originators how note buyers evaluate deals to improve pricing and deal structure - Monitor economic indicators like auto loan defaults, bankruptcy rates, and P&I to income ratios for market timing Topics Discussed: - Networking strategies at note investing conferences and events - Owner finance vs.

seller finance opportunities and origination - Economic indicators pointing to market correction and downturn - Hedge fund note pricing and yield expectations vs. private sourcing - Differences between note buying and traditional rental property investing Guest Insights: - Wayne transitioned from 30-year engineering career (W2 job) to note investing after job instability in manufacturing - Rental property spreadsheets didn't work financially for him - low cash flow with high tenant turnover costs - Wife's job loss in 2018 from medical industry layoffs triggered shift to alternative investments - Tried multiple transactional income sources (wedding videographer, drone work) but found they required constant effort - Rejected cubicle lifestyle after relating to Office Space movie, sought passive income alternatives [Music] hey everyone Dave puts from jkp Holdings good afternoon Mr Nathan Turner hello hello how are you oh good man enjoying this Friday rainy Friday afternoon Jersey uh hopefully the weekend will be a little bit better than we're dealing with right now how are things up in the Canada area good yesterday was beautiful today cooled off quite a bit and then we've got snow forecast for Monday SN holy goodness yeah we're excited though actually we could see in the morning I drive the kids to school and the sun comes up in the East and it just shines beautifully over on the Rocky Mountains so when we get some fresh snow you see the sun coming up and hitting the mountains with the fresh snow oh it's absolutely my goodness that's awesome yeah so what I got to say I'm a little excited about talking to my wife wife before she traveled that we get to see each other soon right we do couple weeks coming up here yeah so we uh last uh webinar we had on was we had Bob repass talk about the note Expo and how you know getting around other note investors and note Originators both is key to our business and networking and doing stuff um is there is there a prime reason that what do you look for what's your goals when you go to those kind of conferences what do you a to do so for me it's it's it's the two sides of the business number one you need Capital so I'm always looking for new investors and number two is notes so I'm always looking for new notes anybody who's creating notes anybody who's got notes for sale I'm looking so do you just go out and go hey I need to buy notes how do you so those people who are maybe first time going how like how do you do that do you conversate do you got to get to know the person how do you how do you approach them sometimes yeah uh you know you just kind of hey how's how's it going what are you up to what are you doing you know and you just kind of get into it I I don't know that I really have a formula necessarily but I just just chat yeah it's a relationship right it's like going on a date I think a lot of people are kind of concerned and scared to go there but it's just talking right get to know each other ask questions uh Cindy saying she's excited to see us there yeah Cindy work excit to see everyone it's been a while uh since it's been May Since no uh DME yeah so while so good to get together we're we're doing a lot of stuff privately with Originators and stuff like that and in this relationship game we're finding assets outside the traditional way of you know buying from hedge funds give the opportunity for it yeah I was just looking at a tape from a hedge fund the other day and uh he's like yeah you know are you looking for yield or you looking for cash flow I was like well it's it's a little bit of both but you know I have to meet Targets on both sides so he sent me this tape he like have a look at these I think these would be great for you and he had strike prices on there and I'm like no man that doesn't work yeah like the prices you've got that doesn't even that barely breaks 10% as a yield and I'm like no that's just not enough yeah he's like well you know it's tough you know to get those kind of yields and whatever and I'm like well from you it is and it's scary right because we we we lived and breathed on those kind of assets for so long and it's not that they went bad the pricing just didn't do well right it just there's more people in the space I know one of our future calls will'll have uh uh de polio from SN come on and talk about how there's a lot of new note investors who are bidding and just not doing anything correctly we're looking forward that call just to kind of go through that Branch part for some of the new people and Originators to know the fact that how note buyers should be pushing you to to buy assets right it's a different world um look forward to traveling down there uh I'm getting in there Thursday night so if you are getting there feel free to stop and say hi to us uh we'll be speaking they were speaking Friday so that's uh yeah we're on the same panel I didn't the same that's awesome Jean saying hi as well he uh he'll be part of our group I'm sure yeah so this year 2023 we made a mission to branch in more into seller finance owner finance world and get a better understanding of it yeah we've done a lot from rml's to owner finance stuff um and people who came from that world and kind of pulling up right so if you're owner finance person we're there to teach you how the note buyer thinks and we're trying to also teach you some of the right ways to originate yeah but I think for us you know back to the roots of being a note buyer this is crucial right we're all about cash flow and yield and we buy nonperforming as well but the cash flow in an owner finance note right now is probably the best Market to be in right now I think so I think so it's it's harder and know I had another conversation yesterday with h with an attorney talking about we've been expecting a downturn we've been expecting something to happen here since 2019 like it this is way overdue yeah um and then in speaking with his attorney yesterday he was talking about how uh they're involved with a company that does auto loans and default in auto loans are going up dramatically yeah so you know his words where it goes auto loans and then bankruptcies and then foreclosures and so I think he's right and I think you know and that's been his experience so we step one out of three I know that I showed a chart in our Facebook group a couple days ago regarding what the p&i payment compared to the uh home income we're surpassed 2006 and S yeah that's scary if anyone needs a chart I I'll put in in the comments we're streaming live on Facebook and Linkedin and Twitter and this I'll it'll be recorded on YouTube but if you need it I can share with you it's amazing where we're at um it's scary we've been waiting for the break and we just don't know when and how it's going to come and it's interesting one more thing I'll add to that is H just I think it was yesterday I saw a headline I didn't go through and read the whole article but it was talking about um how uh the Fed was saying that inflation is still going up so because it's still going up there needs to be hurt there needs to be a downturn in the economy before that correct itself so are interest rates going to continue to go up it kind of sounds like it it's good news for us yeah but I know that's that's not something everybody wants to hear um I see the fact that the bankruptcy attorney from Steve on uh LinkedIn he says that he watched the on playment rate so Steve I'd be curious what you saw in your charts and what you've seen recently um just so we can get an idea what that looks like right um that's awesome uh good to see you Sean as well so we want to bring on someone that really connected what we've done two three or 20 23 right and our brutes of being a note buyer um and when we've I've seen his posts of that and what we found was we need someone to Connected dots other than ourselves who's done what we've done understand we understand but also switch roles and understands the other side of it yeah um and has experience to kind of shoot the breeze right and networking in the space is always key to meet with people likeminded um it's awesome I see BK slow people making minimum payments thanks Steve I appreciate that over there on LinkedIn um it's awesome so let's uh bring our guest in uh he's sitting in the quote unquote Green Room uh Mr Wayne Garrett how are you man I'm good David Nathan how are you thanks for having me on the show welcome welcome uh so Wayne we've seen a lot of your stuff recently you're doing a lot of cool stuff can you share a little about how did you get into notes what brought you into this space where you're in real estate where you're a landlord beforehand tell us a little about your history he sure great a lot of people in the note space right you they start off you were a landlord uh you fix and flipper that's not my trajectory at all I was the W2 guy I'm formerly a engineer I retired from that a few years ago but I spent 30 years of my life working as an engineer I grew up in the generation of go to graduate high school go to college get a degree and get a good job and I did that what I found was in the 1990s which is when I was really starting my engineering career the world was changing manufacturing was changing jobs were moving to Mexico and offshore and I went through periods where I would have a job and then they moved the plant to Mexico and I have to find another job and this happened a few different times so that taught me a few things that taught me that hey maybe the W2 thing is not the greatest thing ever and it also taught me that I have to be adaptable I have to be able to take the experience that I have and what I learned from this previous job and leverage it to get a better job and that's what I always did I always leveraged my experience to get a better job even though they were saying hey we're shutting the doors and we're getting rid of people I'd always leverage that and and move up move myself up the chain so that was that was good but over time it really kind of soured me to the wb2 trajectory like I gotta do something different but I never knew what it was I I tried all kinds of things got I I tried I've been a wedding videographer uh I flew drones wow I've done all kinds of different things trying to make uh different income and a lot of that's transac transactional income sure so transactional income is good but the problem is is if if you get out of your W2 job and you get into something else that's transactional you've built yourself a human powerered helicopter and as soon as you stop pedaling well you come right back down so I I went down this path for a while and and also when I was thinking about this you guys remember the movie that came out in 1999 office space yes that movie really spoke to me because when I saw the characters in that movie like that's me I don't want to live in a cubicle this existence is terrible but I didn't know what else to do and it wasn't until fast forward through several years of being discontent but just continuing because again when you're when you have a good paying job you tend to get in a Groove and had money to pay the bills had money to have a nice house have nice cars my wife is is a career W2 person she's got a really good career to she works in the medical field and so between the both of us for a long time we were dinks dual income no kids so we were just living a nice life we were traveling and buying nice cars and house and just but spending everything not really investing just living life and spending well then you have a life event so back toward the 2018 we had that life event my life my wife lost her career job she'd been in one company for about 26 years and they did a massive round of layoffs in the medical because you know medical is has gone through some changes lately she lost her job and so that opened our eyes to oh we need to do something different so we started looking at traditional real estate investing okay so that that's the path we started down what I found was being an engineer I looked at getting into rental property that's one of the things that people often start off right rental property sure the problem is is that I couldn't make the spreadsheet and the checking account match the numbers didn't add up and didn't make sense to me I'm like wait a minute I'm spending all this money all this effort time and resources and I'm gonna get maybe 200 a month yeah and and then once the tenant moves out I could be looking at a $10,000 make ready for the next next tenant depending on what damage was done what's what needs to be done to the house so those numbers just didn't make sense to me the same with a lot of other things in traditional real estate in that time in the market I live in the Dallas Fort Worth area very very competitive when you when you start studying traditional real estate what do they tell you 70% of of arv is what your your goal is for investing but when you start trying to apply that you very quickly realize that seasoned Real Estate Investors that's not what they're doing they're they're coming in they're coming in at 90 91 92 maybe but it's because a lot of times they have a machine they already know they have uh agreements with contractors they already they can walk into a house and in five minutes they know what it's going to cost them to turn that house because they already have the relationships and the Machinery built cor there a new person coming in you can't compete with that I figured out real quick you can't compete with that so I'm just racking my brains what am I going to do and I was attending R meeting people getting out there there was a guy I don't know if you guys have heard of him Tom Henderson are you familiar with him we have we have had him on the show yeah Tom Henderson came to a ria that I was attending and that's where I first got the interest in notes first time I'd ever heard of note investing yeah but he didn't quite know how to apply it it seemed like how do how do you really apply this and so I just kind of bookmarked that and I told my wife about it and she thought it was interesting too she's like okay we'll bookmark that and I continue down the path of you know marketing for pre-foreclosures and again all the stuff you do in traditional real estate while I'm still doing my engineering career then comes along Eddie speed went to a a one-day class I saw a a promo for Eddie speed's note school so I said let me go try to do that went to a one- day class I I liked the messaging and for some reason Eddie seems to have a way of taking I say it like this Eddie takes the the cookies and he puts them on the bottom shelf he makes not investing much easier to understand I don't know why it's just the way he presents the material quicked with me so I went to a three-day class and then that turned into be you know signing on as a student and from there I just got really involved and decide we decided and at the same time my wife and I had a plan we figured out along the way that trying to be an investor and doing a full-time W2 job is very difficult yeah and so we had a plan we decided let's do this let's downsize our expenses and make it to where we can live off one income which would be hers MH and so we did that we planned this out over about a year and a half and then when it when note School came along it was perfect because we decided okay I'm just going to become a full-time note guy I'm going I'm going to retire from engineering and I'm just going to dedicate all the resources into that we both had uh retirement accounts I had a string of retirement accounts from being at this job and this job because every job I had I had a 401k right and so that left me with a string of 401ks and she had one she had a couple of 401ks too so then we started again learning about self-directed IAS I remember when I first learned about a self-directed IRA that was like what you mean so for those who are not familiar with a self diara just give a basic example of what it looks like how's that go so basically it's the ability to control what you invest in instead of giving your money to a third party and crossing your fingers that they're actually going to do something with it and not just lose it all so people who are in jobs have 401ks right people outside the company may have IAS but they don't realize that you can actually take the IRA and not be in the stock market exactly you can go into real estate you can buy notes you get all that kind of things so self then you're self-directing your retirement account which is awesome yes and you're awesome assuming the risk along with that yeah there's always there's Al always when you're doing Investments there's always some risk of a loss but our philosophy was well look if you if you watch your 401k over a period of time they lose your money too when stocks take a dip they lose your money and it takes forever for it to climb back and recover yeah you know because back in 2008 I remember that happened to my in-laws they they're very close to retirement and if your if your retirement accounts take a 20 or 30% hit ouch that put a lot of people back to either they had to extend out their retirement they couldn't retire or they had to come out of retirement and start working again so looking at that thinking okay we can we can manage this too let's just put our own destiny in our own hands and go forward with that so I'm I'm involved with Note school I'm being a student doing doing the things that Eddie says do um and I'm just continuing to learn and so share about when you first discovered notes how fast did you jump into buying your first how did that process go for you and and What attracted you that's the other thing I'm curious about why was that so the Reason notes were really attractive is what once really so Eddie really explained it to a point where you start catching the vision you start going into and I I'll you know not to get too far in the weeds but when you all the different potentials that you could do with a note selling a partial pledging the note all these different things that I never really knew or or thought of that existed that just gives you more opportunities plus I like the fact of no tenants and no toilets o I like that that was probably the biggest thing the first thing that stuck out to me is so you mean I actually get real cash flow and I'm not dealing with tenants and toilets and I can hire third party servicing to manage all this activity for me and it's a flat fee because as you guys all know if if you have a rental house and you're dealing with a property manager they take a percentage right it's not a flat fee it's a percentage right I didn't like that I like the flat fee much better better yeah a lot of people coming from the landlord space that's that's a huge draw wait I don't have to fix the toilet anymore it is we did it we've been there right M I didn't jump straight the notes I was a landlord first because that's the simplest way to get into real estate you have a loan from A bank yeah you have a tenant they over they pay more than your mortgage payment you're great yeah and that's all I anybody normally when people first get into real estate you can sell a house you can rent a house that's pretty much all we know right those are the those are the options you can rent it or sell it and then when I same with you and I got into notes I'm like wait a second I can do all of these other things plus I still have those two options available to me oh wow okay well exactly and huge box up this brand new world of like wait a minute and the idea of becoming the bank right our pitch line exactly and the great thing is is you don't have to come through the traditional real estate world to do that you can do it I know I'm doing my path is opposite from most people but that's okay that tends to be that tends to be what happens to me in life with everything I tend to do things or or I get to the same destination as a lot of people I just get there differently so we talked earlier before we Brian about seller finance and and the knowledge and experience that a lot of sell Finance people who are listen to us who are not sure about buying notes but they're R riging notes talk a little bit about your experience with seller finance notes and how that is a replacement for the banking system right now well so my experience of seller finance notes is a is a few different things because after you've been in the note business for a few years and you've looked at notes notes people you know I buy notes sell notes and I've brokered notes you see different qualities of notes you start seeing the things that make a note more valuable than other things and especially when you're part of a community of note investors like note School you you are able to actually it gives you a standard because you don't know what is good and what is bad when you first get into the note business it just everything looks like everything kind of looks like gravy at first because it's not tenants and toilets you're like oh it's a $200 p&i is great because it's not tenants and toilets well not necessarily $200 p&i is not going to get you a lot of velocity yeah so you you you start learning that certain people they go out and they create notes that aren't great like a lot of times I see these young guys that go out and they get it notes maybe they were in wholesaling or they were in fix and flipping but they'll obtain a house maybe it's a house out in the country they got it cheap they were able to find they didn't do anything to the house they were able to find a borrower to put in the house as is without doing anything to it they got enough money on that down payment to cover what they have into it and now they have a 30-year note and they're collecting payments but by the way they didn't really vet the borrower they just found somebody with the down payment so you don't necessarily have a good borrower and in the end as you guys know that doesn't yield a very good note it's not a note that's when you want to sell that note that's not a note that true investors want to buy and if they are going to buy it it's going to be heavily heavily discounted yes yeah yeah that takes me right back 2009 when I was first creating notes and I didn't even know they were called notes but that we were doing that selling it on terms and and they were terrible yes terrible borrowers uh the paperwork was was really substandard but right but what I've learned through through note school is you want your paper to look as close to bank paper as you can possibly get you want the underwriting I love the fact if I come across a note that the borrower is paying the servicing fee fantastic ftic I love that because that just makes your yield go up as the note investor yeah exactly all all of these things that actually a well vetted borrower nice asset if I'm gonna sell a partial I don't want a Beverly hillbilly house that's out in the country that looks all run down that's not what I want to show to my partial investor because your partial investor is is just a passive person right or it's suppos you don't want to show them a shack and say well this is what's backing up your money you want to show them it doesn't have to be an expensive house it just look has to look like a decent house that you could actually see someone living in and paying for for 30 years right so what was your what was your learning curve like like you I know you got into no school and there and that's a fantastic education program yeah what was like coming from you know Corporate America into landlording and just kind of into some basic real estate stuff how did you go from there to there and and what was that like was that fire hose kind of level stuff how did that go oh it's completely fire hose everything everything's new all the terminology is different than what I'm used to the paperwork's different from what I'm used to the math is different from what I'm used to every single aspect is completely different than what I'm used to so much so that you have to completely rewire or at least I did I had to completely rewire my brain and my way of thinking um in fact there uh you guys know a guy by the name of Pat precour I don't have you ever heard of Pat Pat precour um he's a big mindset guy that we talk about a lot in that school okay and one of the one of the sayings that sticks out to me still to this day that he said is in order to do something that you've never done you must become someone you've never been yes I've heard that saying before absolutely and that rings so true if you're trying to do because I'm I'm not I didn't do a pivot I did a 180 I've completely burned the ships as far as engineering I'm not going back to that world yeah this is my life I'm in the note investing world this is this is who I am now so to have to get there but what part of your W2 helped you become a note buyer is there it was it was there part of WW2 they kind of prepared you for the note buying space that you pulled in it's hard to identify one specific thing I think it's just a combination of life experience and I just I pull in just life experience whenever I can because everybody has different backgrounds so you use your background and experience whatever that looks like I I did a lot part of my role as as an engineer because people hear engineer and they think you're a numbers geek right I think all I did was sit behind a desk with and do calculus all day and that's not true there's so many different kinds of engineering jobs out there yeah and one of the things I did in my engineering job was a lot of auditing and auditing of of vendors so I would I would fly to France I would fly to Spain I would fly to Milwaukee wherever the vendor was and I'd walk into their facility and I'd spend two or three days there and I would audit every aspect of their facility Well there's a lot of things you have to be able to kind of pick up on quickly to in order to be able to comprehend are they following their procedures are they following their work instructions are they following our instructions we're the customer and we send purchase orders to these guys are they following our purchase order you have to be able to go into a company and figure all that stuff out very quickly and assemble all this into a report you had to meet with Executives so there's there's just a lot of life experience that I've just kind of folded into what I'm what I'm doing being able to just talk you know on webinars with you guys and not be shy because you can't be shy in this business uh you guys talk about it's relational right yeah relational is the so important you have to build relationships in this business so we all have our stuff that we're not good at in this space right tell us a little bit how you overcame some of the struggles you had and what have you done to you know either get better at that struggle or done all the things to overcome them sure I think one of the struggles is being on putting yourself out there being on webinars putting yourself in front of a camera being able to say what you think and have some confidence behind it I think that's such a tricky thing and I think it's intimidates a lot of people so one of the things I did that's been really key for the last couple of years of helping me through that is I joined a Toastmasters Club oh I don't know if you guys familiar with Toast Masters yes yeah so if if if anyone out there listening is not um go to to post masters.org and it's a Communications Club they have many clubs that are virtual since Co a lot of clubs have become virtual some clubs are hybrid they do inperson and um zoom and then some are iners only but find a club that's that speaks to you that you can get involved with and you learn to speak in front of people you learn to write speeches and then give those speeches in front of a group people and then you also learn to take criticism because part of it is called an evaluation so once you give a speech you're given an evaluation now it's a constructive evaluation so they'll tell you here's what you did great and here's what you could accelerate at or do better at and then maybe uh here's something you could work on in the future and end it with something again nice kind of make it a sandwich an evaluation sandwich and it teaches you to be able to take a certain amount of criticism and look at look when you look at comments on anything that you've done you can real quickly weed out the ones who are just making nasty comments to be mean and those who are making comments that maybe will actually benefit you and it's something that's like okay that's a good point I need to look at maybe tweaking that and do better next time yeah I'd say that Toastmaster was probably the biggest thing and then the next biggest thing is working the financial calculator I remember financial calculator used to intimidate me so much but after a while I found I found that as a weakness and I kind of have the mentality that when I find things about myself that are weaknesses I lean into that a lot of times but a lot of times people make a mistake I think of they they take that weakness and they set it off on the Shelf somewhere and they I'll deal with that weakness later or hi it right put in the closet and say the boogeyman put them in the Boogeyman in the closet I don't want to deal with it because I'm scared of it right right but it will always be a weakness until you fix until you address it headon and make it a strength it will always be a weakness absolutely you know one of the things uh we thought before we got on um is sometimes your surrounding is not clear right and we brought the fact that you have a great background so those people who are looking to go on camera we encourage you going camera I've seen plenty of your videos right and people are scared to do that we can overcome those kind of things by different technology skills and just doing it and feeling better about it well yeah you don't even necessarily need to be on actual camera you can you can narrate a a PO PowerPoint video or something like that like right around figure start doing something yeah it's like a GPS have you ever been sitting in the parking lot of Target or Walmart or someplace that you're you're unfamiliar with and you want to get home and you put your home address into the GPS if you're sitting in a parking lot does the GPS tell you where to go yet it does it just shows the parking lot and it kind of has no idea where you are it can't really pick you up until you pull on to a street any Street it doesn't matter Once you pull onto that street the GPS immediately picks you up and then it tells you oh you need turn around or you need to make a right-and turn and it can start making you giving you courts Corrections and I feel the same way about our entrepreneurial um Adventures is you have to take a path you have to take some action if you want to be on camera just be on camera you'll start figuring out what works and what doesn't work we still screw up right we've been doing this for a long time I've beening my setup for so long I mean you guys are seeing with my background and everything this is I've tweaked this over and over and over yeah yeah but the problem is if you don't start like you're saying you'll never get better right if we keep putting it off and say well you know I don't have the best setup or if you go back to our original our first video recordings they're terrible but without them we would never build on tour in a year from now we'll be even better again it's always achieving so marketing is something I think all note buyers struggle with m what have you done to overcome no you know marketing and things that take a lot of time and energy what have you done to overcome those I think the hardest thing that that was for me to do that I finally did was hire a VA finding somebody that's a competent VA it's not just hiring any VA either you have to find somebody that is competent in the creative area CU like we said before we went live in the a lot of times being note investors Real Estate Investors being creative on Facebook is you don't have the bandwidth you don't have the time because that's a whole another set of software that you have to learn yeah to to do those creative things and it's so much easier to pay somebody to do those for you you create the content so like with with my channels I create the content and then my VA sends sends me you know what what he's planning to post and I review it and make sure that all the wording is accurate I'm good with everything and it's building I've built over the time I've built a relationship with this guy where it's it's much more seamless it was a lot of work at first and as time is gone it's getting to where now I can shoot a video and send it to him and couple three hours later he shoots it back to me I look at it this is what we're going to post today great go go with it and so it just makes it so much more streamlined and easy to be able to do that yeah awesome so we're looking forward to note Expo right coming up oh yeah and what are some of advice you can give people who are looking to a 10 note Expo what would you say um is how do you make the most out of the conference coming up because note Expo is connected to note school it's a branch of it for those who maybe brand new or how can they make the most of it because we always talk about you're spending time and money time away from your family and money to go down to this place in network how can get the most out of it I think to get the most out of it would be one find look at the schedule and look at things that interest you on the schedule of speakers what topics are coming up that are topics that you're really interested in that's that's good the next thing is there is a node Expo app so download that app because that's a way that you can actually connect with people even in your general facin I love the app because you could just connect with everyone that's at note school you can see everybody you can start making those connections but then once you make connections start trying to find people that you have maybe you feel like you have some commonality with that you can build a relationship the biggest mistake I see people make you introduce yourself to somebody you talk for five minutes if they don't see an immediate way that they can get value out of you true they bump on to the next person well I don't really see a way I can make a deal with you I gotta get going and they just you don't you don't hear from them again instead of like you said earlier dating the person trying to trying to get to know the person you may not do there may not be an apparent deal right away people act like well if I can't see a deal in this relationship in in the first 20 minutes I'm out and I think especially if you're a newer person and you don't have a huge Network already and you're trying to build that Network yeah then start with making friends start with making figuring out how can you bring value to somebody don't look at it as what what can they do for me look at it as okay what do I have how can I bring value to somebody right yeah and it it depends on the person it varies yeah but it's the relationship it's making friends with people yeah I remember we've we've talked about this before a little bit but I remember my very first no conference in 2009 and my goal was to give away 20 business cards just just that you know just to put myself out there and that was kind of that my version of that and just yeah forcing myself to get to know people that's really become tough though too hasn't it because business cards have kind of gone away it's kind of out of fashion now I still use them I still think they're to I do too but I can't tell you how many times I hand out a card and the person I'm handing one to they don't have any to hand back or they never reach out to you I'm shocked by how many times I've given out my cards and how many little emails I get the next week from the people it's it is a huge networking right so let's shift gears for a second sell financing what are some deals you've come across and got into um that either have been crazier or understand or what are some of the successes or failures you've had with seller financing no sure well so I've I've had good success in buying performing notes and a lot of times what people wonder is well if I'm going to get into notes what area do I want to get into do I want to get into uh mpls non-performing or do I want to do creative stuff hey if if you're already somebody that does Fix and Flip and you're already in heavily into the real estate world and you're you're turning a lot of houses creative is is always a good option but if you're not in that if you're just getting into notes and you're not heavily invested in real estate already then you're looking at what non-performing or performing and what I've always told people is look if you buy enough performing notes you will eventually have a non-performing note to work on So You Don't Have To specifically dive into nonperforming get and I figured this out the hard way I've bought enough performing notes but the great thing about it is I'll give you a plus and minus so the Plus for me is the velocity of cash flow you what what people who invest in rental properties don't realize you're getting back that small amount of rent every month but you've got all this Capital tied up in the asset and the only way you're going to get that Capital out is to leverage your way out of it right not so with a note as you start buying your notes and you start receiving that cash flow you're receiving what principal and interest back so you have this velocity of money you build up your pool of money you go buy another note and then that adds to the stack the the key is not buying one note just like the key with real uh rental properties is not owning one house if you're going to do rental own 20 30 40 well the same with notes if you want to make real cash flow of notes you you need to you know plan on earning 30 40 50 notes keep building your note Empire because that's really gets the velocity before you know it you're buying $150,000 note a month you've got the money and it just keeps churning so that is the positive for me realizing that the the downside I'll share a downside is a lot of new people they want to do small deals yep and I had a small Ira I had this little Ira that had like $118,000 into it I'm think what can I do with this let me get into a small note I'll buy a small non-performing note and that'll be fine sure what again this was earlier in my in my investing career so I didn't know then what I know now if you invest in a small note that's tied to a low value Asset it's Mo most likely it has a low value borrower attached to that low value yes and this happened to be in Ohio well Ohio we all started there Warren okay Warren Ohio so we take the de took the house back uh deeden L instead instead of foreclosing got the house back deed and L however the city had a notice posted on it and the house had been condemned ouch yeah the house had been condemned so what I didn't realize back then was that the borrower had stopped living in the house and had let the house backslide so the house was in terrible condition the city of Warren was you know very much trying to get rid of these uh zombie houses they don't want a lot of zombie houses in their town so they had a um they had a a you know thing on there saying hey the house is condemned here's all the work that it needs and uh you need to give us a $155,000 shity bond yeah and at the time I didn't know what a shity bond was like you sure I don't need to give ay like what's a real quickly it's an insurance policy that you're going to do all this work you even have to do it with an insurance company you have to go to all state or you know certain insurance companies that do these that issue these and then you pay 15 grand well guess what I did this out of a small Ira it didn't have 15 grand to do a shity bond yep so that that wasn't that wasn't an option and then I find out that the BP that I had you ever hear about they hear stories about well the house I had was on the wrong side of the tracks and the value wasn't the value wasn't what it was supposed to be yeah that happened to this house had this house been about one mile north of its current location the BP values would have been good because guess what that's the comps they used because those were the only sold comps they had to use was in the better part of town yeah so my house that I thought was worth 65 70,000 was really worth about 20,000 25,000 in great shape not in condemned shape so it really it really backed me into a corner yes so the only option was okay we I've just got to unload this house I don't have the money to fix it this wasn't the plan I gotta I gota eject this thing well now you're trying to eject this thing so I'm on Facebook Marketplace and try to get this thing sold but you also have ticking clock yeah because the city saying hey we're gonna turn tear this thing down if you don't get us the shy Bond if you don't show us something that that you're going to do something this thing's getting leveled I found out that for some reason investors aren't really interested in houses that are about to be leveled I don't know why but they didn't want to buy it so I ended up taking a loss on the house because I just I had to sell for what I could get out of it which was less than what I paid for the note so that was a that was a a loss that I took but it was also a very valuable lesson in the importance of the collateral and making sure that the the collateral is what you think it is where you think it is yeah yeah and small value deals hey there's nothing wrong with a small value deal buy look if I had it to do over again and I only had $18,000 to spend and I'm going to buy a note I would either buy a partial that was tied to a good asset or you could buy the tail end of a note that was still tied to a good asset find something that's a $100,000 house or or better but we we've talked before about on the show is that people go to college and spend all this money to get education and get a degree right and they walk out with no income from it m Sometimes the best thing to do here is go to school you spend a little money you learned a whole lesson about investing for a small amount of money and in college you don't get that money back right the only way to get that money back is to use the knowledge you gain from that deal on another deal and learn from it so sometimes it's you know you can play it safer and go that route which is great but in the flip side the other way of doing is did I go to school and some people say I'd rather do that than go to should go to some kind of training programs right but always think about every deal is an investment in education as well as in money I agree and I'd say if you financially can do both if you can do professional training with somebody like Eddie or even somebody else I I would suggest doing that but just know that doing that training does not mean that you won't learn the kind of lessons I've learned it doesn't mean because it it still will happen I mean it's just um it's just how life works you you do the best you can with the knowledge and experience you have at the time and you just have to go through some hard knocks sometimes to learn those lessons but I'm such a much better investor now much wiser than I was before because I went through that experience and yeah po polio jumped in here and said your first loss is your best loss polio appreciate that man that's well said yeah and and it happens to everybody just because you lost some money on a deal does not make you special everybody's done it I've lost it's a good emotional roller coaster too you're like such a fool when it happens you're like oh my gosh and I think people lose the fact of they don't feel like they're a professional anymore like well I must not be good at is I can't help anyone because I lost and what you realize is that we've all lost we've all made mistakes things that we knew didn't know were a checklist that we skipped an item and no big deal and then we look back on holy crap so don't think of a loss as something that you now are less of an investor has nothing to do with being less of an investor it's just the course of investing and you can share that experience we encourage you we've been situations where we had a new rookie investor go through a something we've never been through and sharing that experience and putting yourself out there is crucial in space and we're all learning together and yeah you know we're you get in a room with not investors Mario said earlier here we're all bunch of introverts but you know what you get in a room with a bunch of note investors and there's just gonna be stories and stories and stories and stories yeah that's a funny thing too you say introvert I'm very much an introvert I have to I have to force myself to to do all of this like get on webinars and get it's not my natural wiring I could be left I can sit at home all day by myself not talk to anyone and be fine oh that's my wife oh my Lord not forever I mean I still like being socialable yes but but the interesting thing is so an introvert getting out being around people is a draining activity not an energizing activity I'm I think I'm maybe a recovering introvert I can I can go out and I can feel energized but but man I sure value my alone time yeah yeah when you have your downtime because a lot of times you come back from the end of the day if you've been doing a lot maybe you've spok in front of a group of people you've been on stage you've been on webinars or you've just talked to a lot of people at a conference at the end of the day you're just exhausted yeah yeah definitely Paul said if you ever bought a stock that never went down we've all done it right so one of the things you said before about marketing is key on this thing because we've all put stuff out there there and VA is such an interesting interesting feel because you know we've done a webinar on I think we done a webinar we did a private call with the and vas is something that people get lost on hard to understand and again sharing it asking questions to others hey have you found a VA what did you ask at the VA what did you look at where' you find them post these in the Facebook groups or in whatever form you're in right we have our East Coast the jkp group but post and find out what other people have used because what we found in our private call on our weekly call is we don't know what each other have used or not used or see succeeded or failed at unless we share and it's crucial because when we make a mistake we want to make sure everyone learns from it and I learn from everyone else as well so yeah absolutely it's not only about losing in business but maybe you tried a service that didn't work maybe a system that just didn't fit and someone else has a system and we talk about postcard and stuff like that yeah Learning System is always crucial yeah yeah most definitely so so let's finalize with some stuff you've gone from W2 you're doing seller finance paper you're buying stuff you're making mistakes you're putting yourself out there in marketing if you look back 10 years ago would you have seen where you're at today no no way I was in drone mode I was a W2 drone I was you go to work go to work work all day come home spend time with the family go to sleep and do it all over again it was just that cycle and never would I have thought that I'm doing this which is I think part of the beauty because what excites me now is what's what who am I going to be in 10 years yeah who am I going to be in five years that's now that's exciting to me because I feel like I feel free I feel like I'm free to explore and I'm free to to change my mindset and to learn grow and and be different I'm not yes boxed in if you're a W2 guy you're boxed in they tell you who you're gonna be yes they really do you know they kind of put a thumb on you and say well your value is is X that's that's your value is X whatever that dollar amount is whereas in this world you set your you set your worth you set your dollar yeah for sure which I love that the prospect of hey five 10 years I can 10x 20x what I've got going on yeah the only one that limits me is me I'm I'm the limiting factor is how hard do I want to lean in and push yeah my wife and I have those discussions all the time where we're just we're so grateful Where We Are and and we're looking forward to 5 10 years from now and we've we've got plans man good plans yeah if you have nothing to aim at you're hit every time so you got to have plans gotta have goals even if you adjust them as as you go along oh yeah you got to know where you're going yeah for sure so we like to to wrap up and and check in with all of our guests all of our experts and and find out what your crystal ball prediction is what do you see happening in the next say 12 24 months where do you see the market Market going what are we in for well I would say that I think we're going to see interest rates continue to climb because they're they're continuing uh like you guys were saying earlier there's not enough pain right the the FED is saying he we're not seeing enough blood in the street yet we need more blood but we're gonna make sure that we get that blood so we're going to just keep cranking the dial up so I think we're going to see the next the next uh fed meeting we're going to see another rise in interest rates um and I think it's probably going to level off for a period of time they're probably going to kind of see uh some of the stuff I've been listening to and and some of the stuff I've seen on YouTube they talk about Christmas time being something that they watch because Christmas time is the pulse of the consumer and how how good how good are sales for all the retail places for Christmas if sales are way way down they know the consumer is hurting if sales are not down then the consumer's not hurting so true it'd be better for us if we faked out the fed and we couldn't buying stuff for a while and then they'd lower interest rates but since people keep buying I mean you know the F-150 is 100 Grand and people still keep buying them I don't know why but they do yeah so I I think we're going to can see see those interest rates continue to go up but then it also in the seller finance World it works in our favor right sure because now you're going to start seeing more forclosures come up you're going to see more non-performing loans these banks are going to have to you know they're going to do so much downgrading of that eventually they're going to have to cut those assets loose so that's going to put more nonperforming loans into the system once that starts happening then you're going to see better pricing on non-performing loans I know we didn't get into that but I personally think the pricing on nonperforming loans is still high AB like to see I'd like to see that come down especially when I hear guys like you talk about the good old days and what you used to pay for noning in the last cycle I'm like where are those I want those yeah yeah buying it at like 35 cents 40 cents yeah I want those I'm sure polio is looking over there going uh they AR coming back right polio come on well I think I think part of that reason there's so many more people in the space yeah right you know when we got started there wasn't a lot of people doing this right and a lot of has been pushed up by a lot of newer people who are just bidding crazy just to win asset so sorry God yeah no that's that's that is perfectly reasonable you have a lot of of new people and I didn't three four years ago I didn't know what I know today and I wasn't as as diligent as I am today and I see new people come in jonesing for a deal I mean literally just jonesing is like I gotta get a deal I gotta feel like I'm in the business I gotta get a deal and it's just like with buying things people they buy notes just like they're buying cars and other assets I call a car an asset um but just items are way overpriced and people are paying too much money and for the future of my money my fiduciary responsibility to my household yes I don't need to do that I don't mind paying a fair amount for a note and again that depends on on on what the note is I don't mind paying a fair amount but I don't want to feel like I'm I'm overpaying either but I think people get stuck on seeing Oh Joe Bob Sally Mary they bought deals last week I didn't buy anything right and feeling the need to buy and I always remind them if you went back 5 and you had cash in the bank would you have told your now 2005 person to hold the money wait for the crash or jump in there and go get the rental property was Zero money down right it's that same mentality is just because someone bought 14 asset last didn't mean that they bought it a good deal right she buying a deal does you want to buy good deals you don't want to buy deals don't fomo into Investments yeah that's the thing people get that's the the worst thing is people tend to fomo into investing and yeah it's it's easy to do it takes discipline to not do that actually it takes discipline to come up with a plan hey this is my buy box and I'm sticking with my buy box and eventually I will find an asset that will meet my buy box now Eddie Eddie has accused of having too tight of a filter and I think in the beginning I did I had too tight of a filter I lean more a little more conservative uh with my filtering and I sure for me I think that's better than being uh a little more of the the other way sure you know so I kind of always look at something and say okay am I being too tight with my filtering do I need to loosen filtering up a little bit and if if so we'll go from there yeah I'm with you man we're conservative as well right I don't need to buy a thousand deals right I want to buy as many good deals that fits my budget and fits my numbers as possible yeah yeah um I don't care if someone overpaid that's not my problem right maybe they overpaid they knew something I didn't know which makes not but I'm not going to be in a spot where someone to say you know one of the biggest things I got from hedge funds like well been performing for 12 months and I say then put a guarantee that thing will continue to perform if you can't put a guarantee on there doesn't mean it's GNA continue to perform so I have no problem saying this is my numbers I ran numbers you want to see them great but I can't bid above where someone else is because they're probably missing something that we've done 13 14 years of this business saying we've seen people forget taxes you know do due diligence on just back taxes and leans and you know they buy a property do do do with deed Lou kind of find out there's a second lean on there you can't do it cleanly there's a lot of little things that you learn along the way that I think newer people just don't know about and there's things we don't know about still that we're still learning about yeah but then that goes back to the the the network because Network you come across something that you've not seen that you don't that you don't know because let's face it you guys have been in the business for years and you still don't know everything you still haven't seen everything no but you have a network yes you reach out to that Network and you use that Network yes to help you with your due diligence to figure out things yeah exactly that's the power of having a network and sometimes someone who brand new may have a a skill set because they do a W2 job maybe they're attorney on their W2 job they have a skill set they can help you even though they don't know anybody notes right or they're at a title company yeah I mean how can be you know I love when people say well I'm marketing whoa totally different world but you can definitely apply to here and do great jobs yeah exactly yeah it's amazing so uh Wayne we put your uh information how they get a hold of you in the chats and wor about that will people be seeing you in O Expo and uh do you know what you're talking about yet um I am going to be at node Expo I'm not going to be on the stage this year so no no speeches from me I'm going to be there as a as an attendee but hey if you uh if you see me at note Expo come up to me let's let's have a conversation let's make a connection I'm always I'm always looking oh I want I wanted to leave with with with one extra thing I found this thing I thought this was great it it was very applicable so imagine playing Monopoly and never buying any assets or Investments That generate income imagine you just went around collecting $200 and giving your money to the rich with the other players on the board trying to stay out of jail that is how most people live rat race and that's how I used to live uh you know we we bought that game um from uh R Robert kosaki he's got race yeah expensive for a board game but it's great we've got my son playing that game yeah we we're teaching our son he's 11 years old and we're teaching him I think I even have it in here probably about 10t behind me that's awesome it's like don't be part of the Rat Race that's I'm I'm teaching him now to be an entrepreneur and to think differently so that he can have a different future and and come up differently than I was raised and that's something we should actually bring up in the groups or our social groups is like how are you helping your kids you know learn the space we're boring right we do numbers and crunching and stuff like that but having our kids get involved in just the theory is important I completely agreee with you you know one of the funniest things that happened to him in that game so they have all these cards that come up right and and different cards that you pulled well he pulled a card that was a divorce card and came out wiped him out and he's like well I don't like divorce this sucks I'm like where me and my wife are like exactly you don't want to goe you out yeah he learn that in just very young well dat smart I love that game yeah yeah it's great awesome so Wayne we uh we'll we'll be seeing you soon right um it's awesome to have you on here feel free to check a look at his posts on LinkedIn and all stuff Facebook just tune in and listen to him he has some great valuable information um if you had any questions regarding him there's a uh Link in the chat please do that if you have any questions for me and Nathan you know how to reach us Wayne hang on for after and uh take care everyone enjoy your weekend thanks [Music] hey everyone Dave puts from jkp Holdings good afternoon Mr Nathan Turner hello hello how are you oh good man enjoying this Friday rainy Friday afternoon Jersey uh hopefully the weekend will be a little bit better than we're dealing with right now how are things up in the Canada area good yesterday was beautiful today cooled off quite a bit and then we've got snow forecast for Monday SN holy goodness yeah we're excited though actually we could see in the morning I drive the kids to school and the sun comes up in the East and it just shines beautifully over on the Rocky Mountains so when we get some fresh snow you see the sun coming up and hitting the mountains with the fresh snow oh it's absolutely my goodness that's awesome yeah so what I got to say I'm a little excited about talking to my wife wife before she traveled that we get to see each other soon right we do couple weeks coming up here yeah so we uh last uh webinar we had on was we had Bob repass talk about the note Expo and how you know getting around other note investors and note Originators both is key to our business and networking and doing stuff um is there is there a prime reason that what do you look for what's your goals when you go to those kind of conferences what do you a to do so for me it's it's it's the two sides of the business number one you need Capital so I'm always looking for new investors and number two is notes so I'm always looking for new notes anybody who's creating notes anybody who's got notes for sale I'm looking so do you just go out and go hey I need to buy notes how do you so those people who are maybe first time going how like how do you do that do you conversate do you got to get to know the person how do you how do you approach them sometimes yeah uh you know you just kind of hey how's how's it going what are you up to what are you doing you know and you just kind of get into it I I don't know that I really have a formula necessarily but I just just chat yeah it's a relationship right it's like going on a date I think a lot of people are kind of concerned and scared to go there but it's just talking right get to know each other ask questions uh Cindy saying she's excited to see us there yeah Cindy work excit to see everyone it's been a while uh since it's been May Since no uh DME yeah so while so good to get together we're we're doing a lot of stuff privately with Originators and stuff like that and in this relationship game we're finding assets outside the traditional way of you know buying from hedge funds give the opportunity for it yeah I was just looking at a tape from a hedge fund the other day and uh he's like yeah you know are you looking for yield or you looking for cash flow I was like well it's it's a little bit of both but you know I have to meet Targets on both sides so he sent me this tape he like have a look at these I think these would be great for you and he had strike prices on there and I'm like no man that doesn't work yeah like the prices you've got that doesn't even that barely breaks 10% as a yield and I'm like no that's just not enough yeah he's like well you know it's tough you know to get those kind of yields and whatever and I'm like well from you it is and it's scary right because we we we lived and breathed on those kind of assets for so long and it's not that they went bad the pricing just didn't do well right it just there's more people in the space I know one of our future calls will'll have uh uh de polio from SN come on and talk about how there's a lot of new note investors who are bidding and just not doing anything correctly we're looking forward that call just to kind of go through that Branch part for some of the new people and Originators to know the fact that how note buyers should be pushing you to to buy assets right it's a different world um look forward to traveling down there uh I'm getting in there Thursday night so if you are getting there feel free to stop and say hi to us uh we'll be speaking they were speaking Friday so that's uh yeah we're on the same panel I didn't the same that's awesome Jean saying hi as well he uh he'll be part of our group I'm sure yeah so this year 2023 we made a mission to branch in more into seller finance owner finance world and get a better understanding of it yeah we've done a lot from rml's to owner finance stuff um and people who came from that world and kind of pulling up right so if you're owner finance person we're there to teach you how the note buyer thinks and we're trying to also teach you some of the right ways to originate yeah but I think for us you know back to the roots of being a note buyer this is crucial right we're all about cash flow and yield and we buy nonperforming as well but the cash flow in an owner finance note right now is probably the best Market to be in right now I think so I think so it's it's harder and know I had another conversation yesterday with h with an attorney talking about we've been expecting a downturn we've been expecting something to happen here since 2019 like it this is way overdue yeah um and then in speaking with his attorney yesterday he was talking about how uh they're involved with a company that does auto loans and default in auto loans are going up dramatically yeah so you know his words where it goes auto loans and then bankruptcies and then foreclosures and so I think he's right and I think you know and that's been his experience so we step one out of three I know that I showed a chart in our Facebook group a couple days ago regarding what the p&i payment compared to the uh home income we're surpassed 2006 and S yeah that's scary if anyone needs a chart I I'll put in in the comments we're streaming live on Facebook and Linkedin and Twitter and this I'll it'll be recorded on YouTube but if you need it I can share with you it's amazing where we're at um it's scary we've been waiting for the break and we just don't know when and how it's going to come and it's interesting one more thing I'll add to that is H just I think it was yesterday I saw a headline I didn't go through and read the whole article but it was talking about um how uh the Fed was saying that inflation is still going up so because it's still going up there needs to be hurt there needs to be a downturn in the economy before that correct itself so are interest rates going to continue to go up it kind of sounds like it it's good news for us yeah but I know that's that's not something everybody wants to hear um I see the fact that the bankruptcy attorney from Steve on uh LinkedIn he says that he watched the on playment rate so Steve I'd be curious what you saw in your charts and what you've seen recently um just so we can get an idea what that looks like right um that's awesome uh good to see you Sean as well so we want to bring on someone that really connected what we've done two three or 20 23 right and our brutes of being a note buyer um and when we've I've seen his posts of that and what we found was we need someone to Connected dots other than ourselves who's done what we've done understand we understand but also switch roles and understands the other side of it yeah um and has experience to kind of shoot the breeze right and networking in the space is always key to meet with people likeminded um it's awesome I see BK slow people making minimum payments thanks Steve I appreciate that over there on LinkedIn um it's awesome so let's uh bring our guest in uh he's sitting in the quote unquote Green Room uh Mr Wayne Garrett how are you man I'm good David Nathan how are you thanks for having me on the show welcome welcome uh so Wayne we've seen a lot of your stuff recently you're doing a lot of cool stuff can you share a little about how did you get into notes what brought you into this space where you're in real estate where you're a landlord beforehand tell us a little about your history he sure great a lot of people in the note space right you they start off you were a landlord uh you fix and flipper that's not my trajectory at all I was the W2 guy I'm formerly a engineer I retired from that a few years ago but I spent 30 years of my life working as an engineer I grew up in the generation of go to graduate high school go to college get a degree and get a good job and I did that what I found was in the 1990s which is when I was really starting my engineering career the world was changing manufacturing was changing jobs were moving to Mexico and offshore and I went through periods where I would have a job and then they moved the plant to Mexico and I have to find another job and this happened a few different times so that taught me a few things that taught me that hey maybe the W2 thing is not the greatest thing ever and it also taught me that I have to be adaptable I have to be able to take the experience that I have and what I learned from this previous job and leverage it to get a better job and that's what I always did I always leveraged my experience to get a better job even though they were saying hey we're shutting the doors and we're getting rid of people I'd always leverage that and and move up move myself up the chain so that was that was good but over time it really kind of soured me to the wb2 trajectory like I gotta do something different but I never knew what it was I I tried all kinds of things got I I tried I've been a wedding videographer uh I flew drones wow I've done all kinds of different things trying to make uh different income and a lot of that's transac transactional income sure so transactional income is good but the problem is is if if you get out of your W2 job and you get into something else that's transactional you've built yourself a human powerered helicopter and as soon as you stop pedaling well you come right back down so I I went down this path for a while and and also when I was thinking about this you guys remember the movie that came out in 1999 office space yes that movie really spoke to me because when I saw the characters in that movie like that's me I don't want to live in a cubicle this existence is terrible but I didn't know what else to do and it wasn't until fast forward through several years of being discontent but just continuing because again when you're when you have a good paying job you tend to get in a Groove and had money to pay the bills had money to have a nice house have nice cars my wife is is a career W2 person she's got a really good career to she works in the medical field and so between the both of us for a long time we were dinks dual income no kids so we were just living a nice life we were traveling and buying nice cars and house and just but spending everything not really investing just living life and spending well then you have a life event so back toward the 2018 we had that life event my life my wife lost her career job she'd been in one company for about 26 years and they did a massive round of layoffs in the medical because you know medical is has gone through some changes lately she lost her job and so that opened our eyes to oh we need to do something different so we started looking at traditional real estate investing okay so that that's the path we started down what I found was being an engineer I looked at getting into rental property that's one of the things that people often start off right rental property sure the problem is is that I couldn't make the spreadsheet and the checking account match the numbers didn't add up and didn't make sense to me I'm like wait a minute I'm spending all this money all this effort time and resources and I'm gonna get maybe 200 a month yeah and and then once the tenant moves out I could be looking at a $10,000 make ready for the next next tenant depending on what damage was done what's what needs to be done to the house so those numbers just didn't make sense to me the same with a lot of other things in traditional real estate in that time in the market I live in the Dallas Fort Worth area very very competitive when you when you start studying traditional real estate what do they tell you 70% of of arv is what your your goal is for investing but when you start trying to apply that you very quickly realize that seasoned Real Estate Investors that's not what they're doing they're they're coming in they're coming in at 90 91 92 maybe but it's because a lot of times they have a machine they already know they have uh agreements with contractors they already they can walk into a house and in five minutes they know what it's going to cost them to turn that house because they already have the relationships and the Machinery built cor there a new person coming in you can't compete with that I figured out real quick you can't compete with that so I'm just racking my brains what am I going to do and I was attending R meeting people getting out there there was a guy I don't know if you guys have heard of him Tom Henderson are you familiar with him we have we have had him on the show yeah Tom Henderson came to a ria that I was attending and that's where I first got the interest in notes first time I'd ever heard of note investing yeah but he didn't quite know how to apply it it seemed like how do how do you really apply this and so I just kind of bookmarked that and I told my wife about it and she thought it was interesting too she's like okay we'll bookmark that and I continue down the path of you know marketing for pre-foreclosures and again all the stuff you do in traditional real estate while I'm still doing my engineering career then comes along Eddie speed went to a a one-day class I saw a a promo for Eddie speed's note school so I said let me go try to do that went to a one- day class I I liked the messaging and for some reason Eddie seems to have a way of taking I say it like this Eddie takes the the cookies and he puts them on the bottom shelf he makes not investing much easier to understand I don't know why it's just the way he presents the material quicked with me so I went to a three-day class and then that turned into be you know signing on as a student and from there I just got really involved and decide we decided and at the same time my wife and I had a plan we figured out along the way that trying to be an investor and doing a full-time W2 job is very difficult yeah and so we had a plan we decided let's do this let's downsize our expenses and make it to where we can live off one income which would be hers MH and so we did that we planned this out over about a year and a half and then when it when note School came along it was perfect because we decided okay I'm just going to become a full-time note guy I'm going I'm going to retire from engineering and I'm just going to dedicate all the resources into that we both had uh retirement accounts I had a string of retirement accounts from being at this job and this job because every job I had I had a 401k right and so that left me with a string of 401ks and she had one she had a couple of 401ks too so then we started again learning about self-directed IAS I remember when I first learned about a self-directed IRA that was like what you mean so for those who are not familiar with a self diara just give a basic example of what it looks like how's that go so basically it's the ability to control what you invest in instead of giving your money to a third party and crossing your fingers that they're actually going to do something with it and not just lose it all so people who are in jobs have 401ks right people outside the company may have IAS but they don't realize that you can actually take the IRA and not be in the stock market exactly you can go into real estate you can buy notes you get all that kind of things so self then you're self-directing your retirement account which is awesome yes and you're awesome assuming the risk along with that yeah there's always there's Al always when you're doing Investments there's always some risk of a loss but our philosophy was well look if you if you watch your 401k over a period of time they lose your money too when stocks take a dip they lose your money and it takes forever for it to climb back and recover yeah you know because back in 2008 I remember that happened to my in-laws they they're very close to retirement and if your if your retirement accounts take a 20 or 30% hit ouch that put a lot of people back to either they had to extend out their retirement they couldn't retire or they had to come out of retirement and start working again so looking at that thinking okay we can we can manage this too let's just put our own destiny in our own hands and go forward with that so I'm I'm involved with Note school I'm being a student doing doing the things that Eddie says do um and I'm just continuing to learn and so share about when you first discovered notes how fast did you jump into buying your first how did that process go for you and and What attracted you that's the other thing I'm curious about why was that so the Reason notes were really attractive is what once really so Eddie really explained it to a point where you start catching the vision you start going into and I I'll you know not to get too far in the weeds but when you all the different potentials that you could do with a note selling a partial pledging the note all these different things that I never really knew or or thought of that existed that just gives you more opportunities plus I like the fact of no tenants and no toilets o I like that that was probably the biggest thing the first thing that stuck out to me is so you mean I actually get real cash flow and I'm not dealing with tenants and toilets and I can hire third party servicing to manage all this activity for me and it's a flat fee because as you guys all know if if you have a rental house and you're dealing with a property manager they take a percentage right it's not a flat fee it's a percentage right I didn't like that I like the flat fee much better better yeah a lot of people coming from the landlord space that's that's a huge draw wait I don't have to fix the toilet anymore it is we did it we've been there right M I didn't jump straight the notes I was a landlord first because that's the simplest way to get into real estate you have a loan from A bank yeah you have a tenant they over they pay more than your mortgage payment you're great yeah and that's all I anybody normally when people first get into real estate you can sell a house you can rent a house that's pretty much all we know right those are the those are the options you can rent it or sell it and then when I same with you and I got into notes I'm like wait a second I can do all of these other things plus I still have those two options available to me oh wow okay well exactly and huge box up this brand new world of like wait a minute and the idea of becoming the bank right our pitch line exactly and the great thing is is you don't have to come through the traditional real estate world to do that you can do it I know I'm doing my path is opposite from most people but that's okay that tends to be that tends to be what happens to me in life with everything I tend to do things or or I get to the same destination as a lot of people I just get there differently so we talked earlier before we Brian about seller finance and and the knowledge and experience that a lot of sell Finance people who are listen to us who are not sure about buying notes but they're R riging notes talk a little bit about your experience with seller finance notes and how that is a replacement for the banking system right now well so my experience of seller finance notes is a is a few different things because after you've been in the note business for a few years and you've looked at notes notes people you know I buy notes sell notes and I've brokered notes you see different qualities of notes you start seeing the things that make a note more valuable than other things and especially when you're part of a community of note investors like note School you you are able to actually it gives you a standard because you don't know what is good and what is bad when you first get into the note business it just everything looks like everything kind of looks like gravy at first because it's not tenants and toilets you're like oh it's a $200 p&i is great because it's not tenants and toilets well not necessarily $200 p&i is not going to get you a lot of velocity yeah so you you you start learning that certain people they go out and they create notes that aren't great like a lot of times I see these young guys that go out and they get it notes maybe they were in wholesaling or they were in fix and flipping but they'll obtain a house maybe it's a house out in the country they got it cheap they were able to find they didn't do anything to the house they were able to find a borrower to put in the house as is without doing anything to it they got enough money on that down payment to cover what they have into it and now they have a 30-year note and they're collecting payments but by the way they didn't really vet the borrower they just found somebody with the down payment so you don't necessarily have a good borrower and in the end as you guys know that doesn't yield a very good note it's not a note that's when you want to sell that note that's not a note that true investors want to buy and if they are going to buy it it's going to be heavily heavily discounted yes yeah yeah that takes me right back 2009 when I was first creating notes and I didn't even know they were called notes but that we were doing that selling it on terms and and they were terrible yes terrible borrowers uh the paperwork was was really substandard but right but what I've learned through through note school is you want your paper to look as close to bank paper as you can possibly get you want the underwriting I love the fact if I come across a note that the borrower is paying the servicing fee fantastic ftic I love that because that just makes your yield go up as the note investor yeah exactly all all of these things that actually a well vetted borrower nice asset if I'm gonna sell a partial I don't want a Beverly hillbilly house that's out in the country that looks all run down that's not what I want to show to my partial investor because your partial investor is is just a passive person right or it's suppos you don't want to show them a shack and say well this is what's backing up your money you want to show them it doesn't have to be an expensive house it just look has to look like a decent house that you could actually see someone living in and paying for for 30 years right so what was your what was your learning curve like like you I know you got into no school and there and that's a fantastic education program yeah what was like coming from you know Corporate America into landlording and just kind of into some basic real estate stuff how did you go from there to there and and what was that like was that fire hose kind of level stuff how did that go oh it's completely fire hose everything everything's new all the terminology is different than what I'm used to the paperwork's different from what I'm used to the math is different from what I'm used to every single aspect is completely different than what I'm used to so much so that you have to completely rewire or at least I did I had to completely rewire my brain and my way of thinking um in fact there uh you guys know a guy by the name of Pat precour I don't have you ever heard of Pat Pat precour um he's a big mindset guy that we talk about a lot in that school okay and one of the one of the sayings that sticks out to me still to this day that he said is in order to do something that you've never done you must become someone you've never been yes I've heard that saying before absolutely and that rings so true if you're trying to do because I'm I'm not I didn't do a pivot I did a 180 I've completely burned the ships as far as engineering I'm not going back to that world yeah this is my life I'm in the note investing world this is this is who I am now so to have to get there but what part of your W2 helped you become a note buyer is there it was it was there part of WW2 they kind of prepared you for the note buying space that you pulled in it's hard to identify one specific thing I think it's just a combination of life experience and I just I pull in just life experience whenever I can because everybody has different backgrounds so you use your background and experience whatever that looks like I I did a lot part of my role as as an engineer because people hear engineer and they think you're a numbers geek right I think all I did was sit behind a desk with and do calculus all day and that's not true there's so many different kinds of engineering jobs out there yeah and one of the things I did in my engineering job was a lot of auditing and auditing of of vendors so I would I would fly to France I would fly to Spain I would fly to Milwaukee wherever the vendor was and I'd walk into their facility and I'd spend two or three days there and I would audit every aspect of their facility Well there's a lot of things you have to be able to kind of pick up on quickly to in order to be able to comprehend are they following their procedures are they following their work instructions are they following our instructions we're the customer and we send purchase orders to these guys are they following our purchase order you have to be able to go into a company and figure all that stuff out very quickly and assemble all this into a report you had to meet with Executives so there's there's just a lot of life experience that I've just kind of folded into what I'm what I'm doing being able to just talk you know on webinars with you guys and not be shy because you can't be shy in this business uh you guys talk about it's relational right yeah relational is the so important you have to build relationships in this business so we all have our stuff that we're not good at in this space right tell us a little bit how you overcame some of the struggles you had and what have you done to you know either get better at that struggle or done all the things to overcome them sure I think one of the struggles is being on putting yourself out there being on webinars putting yourself in front of a camera being able to say what you think and have some confidence behind it I think that's such a tricky thing and I think it's intimidates a lot of people so one of the things I did that's been really key for the last couple of years of helping me through that is I joined a Toastmasters Club oh I don't know if you guys familiar with Toast Masters yes yeah so if if if anyone out there listening is not um go to to post masters.org and it's a Communications Club they have many clubs that are virtual since Co a lot of clubs have become virtual some clubs are hybrid they do inperson and um zoom and then some are iners only but find a club that's that speaks to you that you can get involved with and you learn to speak in front of people you learn to write speeches and then give those speeches in front of a group people and then you also learn to take criticism because part of it is called an evaluation so once you give a speech you're given an evaluation now it's a constructive evaluation so they'll tell you here's what you did great and here's what you could accelerate at or do better at and then maybe uh here's something you could work on in the future and end it with something again nice kind of make it a sandwich an evaluation sandwich and it teaches you to be able to take a certain amount of criticism and look at look when you look at comments on anything that you've done you can real quickly weed out the ones who are just making nasty comments to be mean and those who are making comments that maybe will actually benefit you and it's something that's like okay that's a good point I need to look at maybe tweaking that and do better next time yeah I'd say that Toastmaster was probably the biggest thing and then the next biggest thing is working the financial calculator I remember financial calculator used to intimidate me so much but after a while I found I found that as a weakness and I kind of have the mentality that when I find things about myself that are weaknesses I lean into that a lot of times but a lot of times people make a mistake I think of they they take that weakness and they set it off on the Shelf somewhere and they I'll deal with that weakness later or hi it right put in the closet and say the boogeyman put them in the Boogeyman in the closet I don't want to deal with it because I'm scared of it right right but it will always be a weakness until you fix until you address it headon and make it a strength it will always be a weakness absolutely you know one of the things uh we thought before we got on um is sometimes you....