JF1963: Everything You Need To Know About Short Sales with Nicole Espinosa

Nicole and her company process over 150 short sales per month. They have taken the short sale process and streamlined it, closing short sales in 2-3 months vs 12+ months. Hear how she’s able to close them faster than most other sources. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“Scaling is not necessarily a good thing if you’re not doing it the right way” – Nicole Espinosa


Nicole Espinosa Real Estate Background:

  • Author of “Short Sales Uncensored” and owner of The Short Sale Queen
  • Her company processes over 150 short sales per month
  • They are able to process short sales in any market
  • Based in Dallas, TX
  • Say hi to her at www.thessqueen.com
  • Best Ever Book: Scaling Up


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Joe Fairless:  Best Ever listeners, how are you doing?  Welcome to the best real estate investing advice ever show. I’m Joe Fairless. This is the  world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.   With us today, Nicole Espinosa.  How are you doing, Nicole?

Nicole Espinosa:  I’m good. Thanks for having me. How are you?

Joe Fairless:  Oh, I am glad to hear that.  It’s my pleasure and I’m doing well.  And a little bit about Nicole – she is the author of Short Sales Uncensored and the owner of the Short Sale Queen. Her website is thessqueen.com. Her company processes short sales in any market, and in fact, her company processes over 150 short sales per month. She is headquartered in Dallas, Texas.  With that being said, Nicole, you want to give the Best Ever listeners a little bit more about your background and your current focus?

Nicole Espinosa:  Yeah, absolutely.  I started in the real estate industry with foreclosures with REOs (real estate owned transactions) and I really learned about how the banks worked and operated.  I hated working for the bank directly as my client, but learned so much about really how to get around things, how they worked, and had relationships. This is back in 2008-2009 when the market was heavily saturated with foreclosures.

At the time we were evicting people… I was in charge of pretty much all of the worst things we had at the time.  It was definitely a learning curve, but after a couple of years I got licensed, and the first deal that I did as an agent was a  short sale. And there was so many misconceptions of what to do, and those agents – and even my broker at that time – was telling me “Don’t waste your time.”

When it comes to short sale specifically, because it is such a different world than normal transactions, most people don’t understand how to facilitate the transaction or really understand how it works.  So I spent pretty much my entire career just educating so that people would feel equipped to at least know how to guide their client or guide a potential seller in that transaction. So I did my first listing, that was a short sale, and I’ve been doing it ever since. Just a lot better now that I spent some time.

Joe Fairless:  Well yeah, you do a lot of them so that would make sense – 150 per month. And in your bio you mentioned that your company processes over 150 short sales per month. What does that mean, you process 150 short sales a month?

Nicole Espinosa: It means we have a constant flow of properties closing and properties coming in, but in our inventory we are working actively with the bank on these listings to get approval.  So right now for example, we have 151 listings. And when we launched nationwide – we are in about nine to ten different markets right now, it will be ten this month…  So even though we have the ability to process in every market, and obviously we are not in every single market, definitely when we went nationwide, I don’t think we expected to grow this quickly. Just a year and a half ago, we were doing 30 to 40 a month. So to go from that many sellers, to scale that much has just been definitely an adventure.

Joe Fairless:  Oh, I bet.

Nicole Espinosa:  Because every state is different, and every bank has different requirements.  For me it’s just been on how to navigate the different states and different markets that we are in.  But that’s essentially what that means, that we are processing over 150 – it’s that we have that many listings in our pipeline, that we are working with investors and other realtors.

Joe Fairless:  How much do you make on average per deal?

Nicole Espinosa:  Our minimum is $5,000 on each deal. And I think when I was doing the numbers for 2019 in the  last couple of weeks, the average commission with fees and everything is about $7,500.

Joe Fairless:  Wow, okay.  So, $5,000 times 150, that’s $750,000 a month. And at $7,500, that’s $13,500,000 in a year. How much of that is profit?

Nicole Espinosa:  We don’t close 150 a month. We are processing that many [unintelligible 00:05:21.03] how we have in inventory, but we are two to three months out on the short sales.  The average short sale closes in about a year, for most agents.  For us, our time frame is two to three months, because we are highly focused on this.  We are not like traditional agents, where we are working with the buyer, and working with the seller – no, this is all we are doing. I have a staff of eight people. I have negotiators, I have an office manager, I have VAs who are calling the banks just to say “Hey, did you get our email?”

Joe Fairless:  [Laughs]

Nicole Espinosa: Seriously, that’s our operation. We try to do as much as we can to be proactive instead of reactive, so that way we can stay ahead of it, and we try to anticipate what the bank is gonna  need before they ask.  So that’s why our process is so much faster.  Average closings, we have about 30 a month.

Joe Fairless:  Wow.

Nicole Espinosa:  So that’s the average closing that we are doing. Last month was our biggest month, we had 32. And now that we are consistently getting more inventory, now our new goal is 45 a month.  So as much inventory as we have, we are trying to increase our closings.

Now, unlike other contracts – like if you are wholesaling or just in a traditional contract with a seller, you usually can anticipate the closing date, because you put a closing date of 30 days, or 45 days. With short sales, there is no way of knowing.

One short sale we could start at the same with another, and then one could close in two months, the other could closing is four… Because there are so many variables, and every lender is different, and every lender has a different process. So that’s why we do such huge volume at a time, because like I said, it could be one month we close 50, because we have more at the same time… So that’s what how we have to do with such a high volume, because we don’t know when they are going to close.

Joe Fairless:  It’s going to be really interesting talking to you about the different states, and the banks, and then how you scale… We are going to get into that. With the closings now – you said you do about 30, and that’s $7,500 per closing on average; 225k times 12, that’s a 2.7 million dollar business. How long have you been doing this, remind me?

Nicole Espinosa:  I’ve been doing this for nine years. It’s going to be ten next month.

Joe Fairless: At what point was it a million dollar business? How many years into it?

Nicole Espinosa:  I’m going to be very honest, because I am very straightforward – last year.

Joe Fairless:  Last year? Wow… What was the tipping point?

Nicole Espinosa:  Here’s the deal, I’ve learned so much these last couple of years of how to really focus on becoming profitable… Because I think everybody’s vision — as an entrepreneur, I think people are so focused on growing. We do really well and we are “Let’s scale”, but scaling is not necessarily a good thing. Sometimes growing just means that you are spending more money if you are not doing it the right way. So for me, I am a visionary. I see the bigger picture.  I want to take over the world. I’m like, “Let’s do this in every market” or whatever, because I know our value and I know that we are good at it. But I have failed so much when it comes to spending too much money, investing everything back in the business, spending money on the wrong hires…  So we are having rehire, and all that.

The tipping point was I started my business all over in October of 2018, and basically fired everyone and took everything back, because I realized that I had this cap to my business because of the employees that I had. They could only grow to a certain level, and they were great at the time, and I had a great culture, but they just didn’t have the capability to grow with me. So I had to take a step back.

Joe Fairless:  What made you realize that?

Nicole Espinosa:  I wanted to quit, and I was so frustrated because I was in every part of my business, and I couldn’t understand why I couldn’t grow. I couldn’t understand why I was so stressed out, working 80 hours a week, when I had so many employees.

Joe Fairless:  How many did you have?

Nicole Espinosa:  At that time I had four.

Joe Fairless:  Okay.

Nicole Espinosa:  And I was like, okay if we are doing 30 to 40 a month that we are processing – and processing, not closing; we are closing only like ten or eleven a month…  And I was like, why am I so stressed out if I have people? And know it because I wasn’t hiring intentionally and I was promoting people based off of loyalty and based off of just the culture that we had.  And I read Scaling Up, and I started really investing in personal growth. I am like okay, “What are my weaknesses, what are my strengths?” and started reading books that were totally opposite of my personality. And when I read Scaling Up, it said something like “One thing. It only takes that one thing.”

Joe Fairless:  Yeah, it does.

Nicole Espinosa:  It’s like this light bulb of like, “Okay, wow. That totally resonated with me.” And maybe people have told me this before, but it was just in a different way that it didn’t connect with me. So I read Scaling Up and it said this powerful statement, “If you look at your organization and you look at your employees, would you rehire them?” And I started picking apart and I was like “Oh my God, I wouldn’t.” I love these people, but oh my gosh, I am having to micromanage, and I am not even empowering them because I am so worried that they are going to screw up, or whatever… I had these bodies in these roles, but they weren’t taking ownership of them, and it was basically me doing everything.

Joe Fairless:  What a powerful question.

Nicole Espinosa:  Yeah. I tell people all the time, “Look it is so hard because we as individuals, we tend to gravitate towards people that are like us.”  And if we hire that way, we will never grow, because we need people that are the opposite of us. We need people that are going to be better in certain areas where our weaknesses are. And the only time we can do that is to very self-aware of what we are good at and what we suck at. And most people just focus on what they are really good at.  It was very, very humbling.  Being in the business for a while and…

Joe Fairless:  You fired all four?

Nicole Espinosa:  Oh I fired everyone, including my VAs, too.

Joe Fairless:  What was that like?

Nicole Espinosa:  Oh man, high blood pressure… I was so stressed out. [laughs]

Joe Fairless:  What’s a suggestion you’d give to someone who needs to go through similar process?

Nicole Espinosa:  To just do it, because it will be more painful to continue to go the path that you are going if you have the wrong people.  And you know what – what I noticed, when you say you fire someone, you assume that’s ugly, right?

Joe Fairless:  It’s always a good thing, because they are not maximizing their potential as a human being or as a professional, because they are not in the role that’s best suited for them. So it’s a good thing.

Nicole Espinosa:  Exactly.  And they were so relieved and happy too, because they were only staying because they felt loyal to me. So they were miserable too, they just didn’t want to admit it, and they weren’t going to quit. So when I did let them go, it was just like this relief of like, “Oh my gosh, okay… I can do what makes me happy”, and had I identified the right role for them, maybe they would have stayed in the organization and thrived based on their skillset, not based on what I needed at the time.

So my advice would be just to do it. To take an inventory of the people in your organization and figure out are they truly in the right role? They may have the desire to do it, but do they have the capacity? And I don’t think enough people talk about that. It is not until you are in it that you fully understand how important it is that someone is capable of being able to grow with you.

And I do believe that there are certain people that will just be with you for a season, but I also believe that there are people that can stay with your organization and buy into your vision as long as you continue to provide opportunities and growth. There is no reason why they can’t grow with you.

Joe Fairless:  So that’s half the battle, identifying that and then firing them, but the other thing you nailed, clearly, by taking that from 1 million to 2.7, is finding those right people, and making sure you qualify them properly… So how did you do that?

Nicole Espinosa:  Well, I started with the foundation.  Okay, I know my skill set, I know that I can build relationships… I think the important thing was that I knew every aspect of the job. In any given moment, if every single person in my organization quit, I could dive right in and do any part of the job.  And I was like, “Okay, if I am gonna be able to go out there and build relationships and grow the business and bring in the business, then I need someone that’s gonna to hold down the fort.” I needed somebody that was going to be like me, but  better, and be able to manage, because that was the other thing that I was terrible at, was managing. I am a great leader, but I am a horrible manager, because I have no patience. That’s why I can’t do it. Like, I don’t care just do it; just get it done.  I am a great boss and I am very flexible in things like that, but the job has to get done. It’s very black and white for me. We can have the best relationship if you do your job. Besides that, if you don’t, none of us eat. For the bigger purpose, it doesn’t work for anyone. So I realized I need somebody that is a good manager.

So it was actually Facebook – on your Facebook Page you can create a job. So I put it out there as far as like an Office Manager, and I knew that I was looking for a unicorn, because not many people understand short sales, have never done them… So, anyways, fast forward, Stephanie who’s my office manager now, she was doing them for an investment company. And she applied.

It was one of those things where I kind of didn’t believe her… I was asking her certain questions, because I am like “Okay, if you’re BS-ing me, I am going to know.” And she was just amazing. What got me was that in my book — she was like “Yeah, I read your book.” She’s like, “I probably would have added this, this and this”.

1: [laughs] That’s good!

2: I feel in love with her. I was like, “Oh, my God.” So that to me — I mean, it was just such a great fit, because where she was at she wasn’t happy, and there was no room for growth… They kind of just took advantage of her. So we had the same vision as far as where we wanted to grow, same work ethic… And she has helped me so much streamline, where again, I don’t think systems — I do now, because I have thrown myself into it… But I was the type of person that — I am a very visual person, so I had my notebook, I would get leads, and I would write everything down to retain information. And then it got to the point where I was like, “Okay, I can’t do this anymore. I am getting a [unintelligible 00:15:20.00].” Facebook, and Instagram, and this and that… We needed one central place to be able to do it so there’s no balls that are being dropped.  So we basically created the system that we have now. We use Infusionsoft, which is an awesome CRM database or whatever… But the biggest thing with that is that we were able to create a website.

If you go to helpmewithmyshortsale.com, you can literally enter all the lead details and then it goes right into Infusionsoft. So it creates a profile and it tags you as the ambassador [unintelligible 00:15:50] and it triggers a text to the seller saying, “Hey, Joe referred you over to us. When is the best time to connect?” And that way there’s instant contact, and we are not having to enter into it. It takes a lot of the steps out and streamlines it.

So that’s how we are able to scale – I basically looked at my organization as we started growing, and saying “Okay, what are the things that we are doing two to three times a day that we can put a system in place so that way it can go a lot smoother and we are able to scale it?”  We spent almost an entire year just working out the kinks, because working with 30 homeowners a month compared to 150 is a completely different ball game. They’re so many humans…

Joe Fairless: Yeah, it forces you to scale, and you have to.

Nicole Espinosa: Absolutely.

Joe Fairless: Or it forces you to develop a system in place, in order to scale.

Nicole Espinosa: Yeah, and I would rather take less business than not do what but we say we are going to do. So it was very important to me that because my business is 100% referral, we are not marketing for these sellers, we are not cold-calling, we are not doing any of that. So if we are doing such a high volume, my reputation needs to stay intact, and saying “Hey look, if you refer this over to us, you’re trusting that we are going to take care of it.” And we are going to take care of this person and that most importantly will give you an opportunity to be able to buy these properties and have this whole other pipeline, so your marketing dollars aren’t going to waste.

Joe Fairless:  Closing on around 30 a month now; your goal is in the short-term to be up to about 40 to 45, I believe you told me… The perception that I have – which is clearly not correct, so please educate me and perhaps other who are listening – is that short sales are not nearly as prevalent as they were when you started; that has to be a fact. But there’s still clearly a lot of them out there.  So what it’s like being in the business now, and how are you getting this type of volume?

Nicole Espinosa: So I do believe that I have a lot of the market share because I specialize in this and because we are consistent. We’ve been doing this for so long, and most people they just do one day, and they do another…  And they know – when they hear Nicole, they think either “The Short Sale Queen” or “The Short Sale Expert” or whatever.  And that’s why when we went national, that’s why the company name is The Short Sale Queen, because that was my nickname in Dallas-Fort Worth for a really long time.

So as far as the difference, at the time when I was doing short sales and I was teaching classes and things like that before I wrote my book, everybody wanted to do short sales. Because once the REO market kind of dried up, short sales becoming more known and more prevalent. And then of course as the market starts stabilizing and getting better, everybody that was trying to dabble into it and realized how much work it was, kind of fell off.

But here’s the deal – there’s always going to be short sales in any type of market, because even in 2014-2015 when we started seeing the prices going up again and we started seeing all that, we were still busy, because people are always going to have a financial hardship. People are always going to put themselves in situations that they can’t get out of. So it was just different, because short sales were so big before because prices dropped drastically, because the market crashed.  Now, as you shift to 2019-2020, it’s not so much about the prices going down, even locally, it’s turning into a buyer’s market which means sellers lose leverage – it’s not about that, it’s about clients who lost their jobs and get into a bad financial spot and then stop paying, because they are trying to do something with their  bank. So if they are doing loan modifications, they are losing all of their equity. So at any point, if they have to sell, they are forced to do a short sale because they lost all their equity to the bank, because they haven’t been paying. Or they did do a loan mod, and it was a band-aid fix, and now they agreed — because when the banks do loan modifications, they add all of those fees to the back of the loan, and a lot of times they are extending the life of the loan. So they are paying into something where they are not ever going to get out of. So that’s why people don’t understand – if you don’t understand that piece of it, you won’t understand why they’ll always be here.

Now, I believe in the next year that we are going to see so many more short sales coming back, because we are seeing a lot of these loans that were done the last couple of years because people were desperate to become homeowners, get into 100% loans again. We are seeing a lot of like new builds that people were just getting into and not really thinking about it, and they were at their max of the monthly payment, and now it’s been a couple of years and something happened to where they can’t afford it anymore. We are starting to see a lot of those come up now, and I think in the next years, we are going to see a lot more.

Joe Fairless:  When you take a look at the short sale process, what is the most challenging part of the process for you and your team?

Nicole Espinosa:  The price.  And that will always be across the board, not just with our company but just in general.  Number one reason why most short sales fail is because of price… Because the banks, even more now that it’s been years and years where they have been doing short sales and they have short sale departments, they try to pretend like they are in real estate. They try to act like they know based off third-party valuation, like “Okay, this is the price.” Well, we know that price is relative, or it’s an opinion, because it really depends on what someone is willing to pay.  So that’s why it is so difficult, because if the bank is trying to take as less of a loss that they can – they want to get as much as they can for the property.  That’s probably the number one thing – how do we consistently adjust the process so we can stay ahead of being proactive. For example with us – if an investor refers something  over to us, we let them know, “Do you have any repair bids, do you have anything that we can help us justify your offer?” Because if the property is in need of repairs and it’s something to where it won’t finance, it’s going to go to investor, because a traditional buyer cannot purchase it… So why not go to the investor that has relationship with the seller?

So we ask them, “Hey look, what do you have so that we can use as much as leverage as possible to negotiate with the banks?” and then get it to the appraiser so that we can show all that information and try to stay ahead of it. And then a lot of times that works, and then sometimes we get like the older appraisers that are stubborn and think they know everything, and don’t care, and we still have to dispute it with the bank… But we try to be as proactive as possible and get as much information upfront so that we can show that to the lender to have that as much leverage as possible.

Joe Fairless:  Taking a giant step back, what is your best real estate investing advice ever as it relates to your area of expertise?

Nicole Espinosa:  The best advice I can give is to capitalize on every single lead that you come across. I’ve been working with investors obviously for a very long time now, because 75% of my business is from real estate investors; the other 25% are from real estate agents who don’t know how to do short sales. So in working with a lot of the bigger companies and the bigger franchises or even smaller companies, a lot of times in training their acquisition teams and talking to them, they don’t understand that they need to be able to capitalize on everything. And I’m not saying to do everything, right? We can’t spread ourselves thin, we have to be able to be good at something, and highly focus on it… But if you don’t have a solution for everything that you come across, you are wasting money; you are leaving money on the table.

For example, a lot of times investors are just highly focused on properties with high equity. And they spend the money, they get a lead, they build rapport and then the deal doesn’t work, and then they walk away… Instead of trying to find a solution. Because at the end of the day, the sellers still has to sell.  It may not work for your numbers, but how can you provide a solution to where you can still monetize it?  And that’s the way you need to be; if I can’t do it myself, who can I outsource this to, to either still get paid, partner up with someone, but be able to recoup that? Because direct marketing is expensive.

You need to be able to provide solutions — and it’s not just about money, it’s about helping that person, because clearly, if they are coming to you, there’s a need to be able to sell. Something happened to them, they have to move on, especially if they are in foreclosure and they have some type of hardship. So how can you be that resource for them to be able to help them move on to the next phase of their life?

Joe Fairless:  We are going to do a lightning round. Are you ready for the Best Ever Lightning Round?

Nicole Espinosa:  Let’s do it.

Joe Fairless:  Alright, let’s do it.  First, a quick word from my Best Ever partners.

Break: [00:24:39.00] to [00:25:18.28]

Joe Fairless:  Alright, Best Ever book you’ve recently read?

Nicole Espinosa:  Rocket Fuel.

Joe Fairless:  Rocket Fuel?

Nicole Espinosa:  That’s right. I just got finished reading that one.

Joe Fairless:  Okay. And I wrote down one that you’ve mentioned earlier, Scaling Up – would you recommend that one?

Nicole Espinosa:  Oh, a hundred percent. I didn’t just read it, but I’ve read that at least twice.  And if anybody is building a business, an actual business – you need to read that book.

Joe Fairless:  Hey, that’s me. I am going to read that one, too. I will be buying that. And I think 99.9% of Best Ever listeners are building a business too, so there’s gonna be a lot of purchases with that one. What is the deal you’ve lost the most amount of money on?

Nicole Espinosa:  I spent a year and a half helping an ex-husband – it was such a long story, but I lost 15k on it because we spent so much time and money working it and we never ended up closing.

Joe Fairless:  It wasn’t a short sale?

Nicole Espinosa:  It was a short sale, yeah. And we don’t get paid until it closes.  And that was one of those situations where we did everything that we could, and I have such a big heart, I was like, “Okay, we can try this way…” And this is one of the situations where three people had passed away, so the heirs ended up being kids, which — you learn something every transaction. So you need [unintelligible 00:26:23.06] for those heirs, and there just wasn’t any more money to be able to pay for an attorney to do it, and all that.  But we got this short sale approved three times.  So we did what we were supposed to do, we just couldn’t sell because of the title, because everybody kept passing away.

Joe Fairless:  What’s the deal you’ve made the most amount of money on?

Nicole Espinosa:   The most money I made on one transaction was $55,000, and we ended up buying it. I found the deal – this was early on, and I ended up purchasing it ourselves and then flipping it… But there wasn’t much work that need to be done, and the loan was in default for so long that the bank literally told us, “If you just gave us this, you can have it.” And it was just a slam dunk.  It was awesome.  It was a reverse mortgage, and we need more of those.

Joe Fairless:  Since you made a disproportionate amount of money on the reverse mortgage, and you said you need more of those, why not put 100% of your focus on getting of those deals, versus doing the short sales?

Nicole Espinosa:  Well, in that case – it was a very rare case.  Yes, absolutely we could hyper-focus on marketing to reverse mortgages, but… In this situation it was a bad note, and the bank could not foreclose on the homeowner. So the reason why we are able to get them so low – and it wasn’t even us fighting with them, it was us saying, “You’ve gotta do something” because the attorney could not foreclose it — I think it was almost ten years of being in default, where the homeowner had passed away and it was just sitting there.

So it was very rare, but we are focused on maximizing on every deal that we can.  And I told you, my minimum is 5k, but we do make a lot more on a lot of the deals. We just have a minimum that we have to still be able to be profitable and work hard on these deals for the client.

Joe Fairless:  What is the best ever way you like to give back to the community?

Nicole Espinosa: Honestly, educating. Being a resource for investors and agents.  I’ve said this my entire career, I will have people that will call me just to pick my brain, and to help them even if I am not involved. So I do the best that I can to make myself available to professionals, because the way I look at it, I feel like money will always come. And if I can help you to help someone else, then that’s the most important thing, if you want to take it on yourself.  If you don’t, then you are always going to have me to help you with it. So the best way I can give back is with my knowledge and to be able to help you, even if I am not directly getting paid from it, or whatever.

Joe Fairless:  How can the Best Even listeners learn about what you are doing?

Nicole Espinosa:  They can go on my website, thessqueen.com, and we are also on YouTube, The Short Sale Queen. We do videos every week.

Joe Fairless:  Nicole, thank you for being on the show talking about how you scaled tremendously over the last 24 months… And the key is just fire everyone. [Laughter] The key is to…

Nicole Espinosa: That’s gonna be the title, right? Or the caption… [laughs]

Joe Fairless: Yeah, just “Struggling in your business? Fire everyone and start from scratch.” But it’s assessing what your strengths are, it’s assessing “Would you rehire the people you currently have in place?” What a powerful, powerful question that is; that really can get an entrepreneur thinking… And then building the right team members to go along the journey with them.  And it’s knowing your business. If you didn’t know your business, then you wouldn’t know who to hire, how to hire them and what you need. It’s knowing yourself and your business.

Nicole Espinosa:  I think self-awareness as an entrepreneur, as the business owner is probably the most important thing if you want to be successful… Because if you can’t get out of your own way, you can’t grow. Because we always have these blind spots, and I feel like that is then the key for me to keep growing, is understanding “I really suck at this, so I am going to continue to outsource, I am going to continue to try to develop and grow, and put people in place that are better than me, so that instead of being prideful or instead of saying “Okay, I got this..” And I did, for a long time. I was like, “Oh, I got this. No worries.” And it was more of just trying to get it done, instead of taking a step back and saying “I don’t need to reinvent the wheel, I also don’t have to be great at everything.” I can focus on my strength and then outsource the rest.

Joe Fairless:  Thanks for being on the show. I hope you have a best every day, and we’ll talk to you soon.

JF1770: High Performance Real Estate Investing with Non-Performing Notes with Paige Panzarello

Paige has started and ran multiple real estate investing businesses, and has been investing in real estate for over 20 years! Today Joe and Paige will have a discussion about her entire real estate story, from losing $20 million in cash to getting back in the real estate game and having more success than ever before with non-performing notes. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!


Best Ever Tweet:

“They will focus on assets that are valued over $200,000” – Paige Panzarello


Paige Panzarello Real Estate Background: 

  • Real estate investor and entrepreneur for over 20 years
  • Founded and runs her own non-performing note company
  • Completed over $150 million in real estate transactions to date
  • Based in Simi Valley, CA
  • Say hi to her at https://www.cashflowchick.com/
  • Best Ever Book: Three Feet from Gold


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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Paige Panzarello. How are you doing, Page?

Paige Panzarello: I’m great, Joe. Thanks so much for having me on.

Joe Fairless: That is great to hear, and my pleasure. A little bit about Paige – she is a real estate investor and entrepreneur; she’s been one for over 20 years. She founded and runs her own non-performing note company, and she’s also had a construction company. She has completed over 150 million dollars in real estate transactions to date. Based in Simi Valley, California. With that being said, Paige, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Paige Panzarello: Absolutely. Hi, Best Ever listeners. Great to be here. As Joe said, I’ve been in real estate and real estate investing for over 20 years. I started out by default, with some buy and hold properties; I owned a sewer treatment plant and some land. Prior to 2005, and that boom and then bust, I was in my growth spurt. I started out knowing nothing at all about real estate or real estate investing… And I just had to jump in with both feet, and ask a lot of questions, and surround myself with people that were in the know.

Then of course you have to be bold, too. I was very young at that point, so I was somewhat fearless. [laughs] Things have changed a little, Joe, but… [laughter] So I surrounded myself with a bunch of people and I grew really fast. We ended up having 36 employees. I owned my own construction company, and I started it knowing nothing about construction.

Joe Fairless: Wow.

Paige Panzarello: Yeah. We were building our own projects, we were building everybody else’s projects…

Joe Fairless: Where at?

Paige Panzarello: Mostly in Arizona. We had some in California, but mostly in Arizona.

Joe Fairless: Okay.

Paige Panzarello: And we were rocking and rolling. It was great. I held all of our licenses, except HVAC and roofing, and the only reason we didn’t have those is the insurance was too high… And it was prior to 2005, so we were just going crazy with building. Then the crash happened… And I actually saw it coming, Joe. A lot of us did. I foolishly thought it’s not going to happen to me though.

By the end of the day, I was very fortunate in that I did not have a lot of debt. I was only encumbered about 10%. I had a lot of assets that I could sell, and it was really a fire sale… And at the end of three years I was very fortunate that I was able to fire-sale everything and pay everybody that I owed; I didn’t have to go through a bankruptcy dismissal, or any of that stuff. But three years later I lost 20 million dollars.

Joe Fairless: Net worth or cash that was in your bank account?

Paige Panzarello: Just cash that was in my bank account.

Joe Fairless: So you had 20 million dollars cash in your bank account?

Paige Panzarello: Yup.

Joe Fairless: And then it went away.

Paige Panzarello: And it went away.

Joe Fairless: Okay.

Paige Panzarello: Between the cash and the properties that I owned and everything else… Yeah, liquid – it was cash. It went away. But I felt really good, because I was able to pay the people that I owed money to.

Joe Fairless: Absolutely.

Paige Panzarello: To me, integrity is everything. So it was terrible for me, and I don’t like to call that a failure, I like to call that a really difficult learning experience, but I was able to take care of the people that I owed money to, which made it all worth it to me.

Joe Fairless: Absolutely, yeah. And they clearly appreciate that, and you are high on their list of people who have integrity, I imagine, when you speak to them.

Paige Panzarello: Thank you. Yes. I do have investors to this day because of that… And clearly, I went away from real estate investing for a little while; I needed to regroup… [laughs]

Joe Fairless: What did you do?

Paige Panzarello: I was always very entrepreneurial, so I started small, little businesses, but I was never fully satisfied, and my husband said to me “Paige, what are you doing? We need to go back into real estate.”

Joe Fairless: What little small businesses?

Paige Panzarello: For instance, I’m a dentist daughter, so I started a teeth-whitening business, and I actually still own it; I have other people running it for me, but… It was a perfect fit for me, being a dentist daughter… [laughs] But it wasn’t where my passion is.

Joe Fairless: Okay.

Paige Panzarello: So I had to rebuild, Joe. I had nothing when I came back into real estate. Nothing, literally.

Joe Fairless: Well, you had a teeth-whitening business. Was that producing some good cashflow?

Paige Panzarello: It was, but not where I wanted to… And it still is, by the way, but not where I wanted to be in my real estate investing career.

Joe Fairless: Okay, got it.

Paige Panzarello: It was enough to pay the bills and have a little fun, but…

Joe Fairless: There are more zeroes with real estate.

Paige Panzarello: Exactly. So I came back in, and I did what everybody does – I stared out by wholesaling, and fixing and flipping, and I did some tax liens and tax deeds, and all the while I started studying notes. And for me, angels absolutely sang when I got into the note space… And I haven’t looked back. I love the non-performing notes space; I’m actually in a position where I get to help people and do real estate, and those are my two passions. I’m blessed every day that I get to do it.

Joe Fairless: Well, let’s focus our conversation on that, but you’ve mentioned something at the very beginning – clearly, I can’t let that just go by without me asking a follow-up question or two… You said at the beginning you owned a sewer treatment plant?

Paige Panzarello: Yes. [laughs]

Joe Fairless: Okay, so how did you become an owner of a sewer treatment plant?

Paige Panzarello: Okay, so as I said, I started my real estate investing career by default. My grandmother passed away, and she had a very large estate. There was properties that she owned in California and properties that she owned in Arizona. The Arizona properties, which is what I originally started out handling – there were 38 townhome units; we were about 40% occupied, so we were really, really in destitute times… And by the way, the estate was about four million in debt.

And we owned a sewer treatment plant, and we owned land. When I say “we”, my grandmother and the estate, which – long story short, it went to my mom, and then I bought the company from my mom.

But yeah, the sewer treatment plant was a piece of the giant estate that she owned, so I learned a lot about sewer treatment plants, more than I care to share. [laughter] But it was really an amazing experience, because again, I knew nothing, and within three years I was able to turn that four million around and put us back in the black, and we just started rocking and rolling. We did sell the sewer treatment plant to the district, which was great. That’s kind of helped leverage us out of this debt. And then the townhome units, I was able to turn that around, too. I worked with all of my vendors and paid them everything that was due to them… And again, there’s that integrity thing, Joe; I made promises and I kept them… And I’ve built amazing relationships because of it.

Joe Fairless: I’ve never spoken to anyone who owned a sewer treatment plant, so just educate me – how do you turn a non-performing sewer treatment plant around, to be performing?

Paige Panzarello: Like I said, it was a privately-held sewer treatment plant, obviously… And we were only hooked up to about 10% of its capability. The townhome units, like I talked about, were hooked up, and a couple other areas were hooked up, but we were only running at 10% capacity. The district in Arizona where we are – the district was in desperate need for a sewer treatment plant, because everybody was on septic. And we’re right along the Colorado river, so as a result, the Army Corps of Engineers comes in if the septics is running into the river etc. So the county/district was desperate for a sewer treatment plant… So we were able to sell it to them for a decent amount of money, and we also negotiated some irrigation water for a very long time for the properties, which was great.

Joe Fairless: Thank you for talking about that, because I hadn’t ever come across that before.

Paige Panzarello: It is unique.

Joe Fairless: Whenever I come across something I’ve never come across before after interviewing 1,600 real estate investors, I like to ask a couple follow-up questions, because I imagine a lot of people haven’t come across that either.

Alright, let’s talk about non-performing notes. 90% of the listeners know what non-performing notes are, and the general business model… But will  you just touch on it for the minority of us who might not know? And then we’ll get into the meat of it.

Paige Panzarello: Sure, absolutely. Non-performing notes – notes in and of themselves are a promise to pay. So when you buy a car, or you buy a house, you sign a promissory note that you’re gonna pay the bank back the money that they have lent to you in order to buy said asset, whether it’s the real estate, or a car, or whatever. And there’s different types of note investors – there’s performing note investors, which is exactly what it sounds like; the borrower is paying their monthly payments, so you’re getting monthly cashflow being  a note holder, because you’ve become the bank, and you don’t have the headache of tenants and toilets, which is part of what I love about note investing – we get that monthly cashflow and sometimes chunks of cash without the headache of tenants and toilets. Been there, done that, so for me it’s amazing.

Non-performing notes is just what it sounds like – the borrower has stopped paying on their monthly mortgage, so I step in and I will buy that note, meaning I buy the debt; and I’m in the first position, I don’t ever buy second, so I’m the first one tom get paid… I will buy that debt at a very deep discount, and I base my purchase price on the collateral that’s securing the loan. In other words, I do an analysis of the house that is securing my invested dollars. And when I do that, when I can buy it at a deep discount, I’m not building in an equity cushion, and it gives me a lot of flexibility to be able  to work with our borrowers to actually try and get them to stay in their home.

Joe Fairless: What is the discount that you like to buy it at?

Paige Panzarello: Well, like to, or can? [laughs]

Joe Fairless: Both, both. 100% discount, but maybe — what’s typical?

Paige Panzarello: Everybody deserves to make their money and a  little bit of profit, right? My strategy is always “pigs get fat and hogs get slaughtered”, so be fair and be equitable. The discounts that I used to be able to get – we used to be able to pick them up at anywhere between 40 and 55 cents on the dollar. Nowadays it’s more like 55 to 61-62 cents on the dollar. It’s still a pretty big discount, so if the market drops 20%, if you’re a fix and flipper, that’s gonna hurt you, if the market drops that much. If the market drops in note investing and we’ve built in a  45% equity cushion, a 20% drop is not gonna hurt us nearly as badly as some of the other forms of real estate investing.

Joe Fairless: Okay. And on average, how many notes are you buying at once?

Paige Panzarello: It really just depends. We buy small mini-pools. Sometimes we do one-offs, which means we just cherry-pick. Sometimes we buy larger pools. It’s just a matter of what the asset managers have available for us. There is competition in the note space, but I’ll tell you, it’s a very collaborative space and it’s not like scratch-your-eyes-out type of competition, where everybody is trying to climb over everybody else and outdo them. That’s not the case here in the note space.

Joe Fairless: Why?

Paige Panzarello: You know, I often ask myself that question. I think because there’s so much inventory, and life happens to people every single day. And this particular space – like I said, between the asset manager, the loss mitigation team, the servicers – is very collaborative. We all really do help each other, and other note investors. Sometimes there’s a pool buy, meaning we have to buy the whole pool, and us note investors, we’ll get together and say “I wanna carve out this for my portfolio”, and we collaboratively buy the pool, which is really cool.

Joe Fairless: How does that work? How do you structure that?

Paige Panzarello: Each situation is different. Of course, if I’m the one that has brought the tape – and the tape is just basically an Excel spreadsheet of all the assets available for sale; that’s what’s called a tape. So if I have received the tape and I go to the other investor, I will simply say to them “Listen, I wanna carve out all of the Texas notes, or half of the Texas notes. Then we’ll do a lottery on the other half.” Or I will know that they only deal with Ohio, so they want all of the Ohio notes, and we’ll take the Virginia notes. It really works itself out; there’s really not a lot of fighting that goes on, as long as we know what each other’s buy box is.

Joe Fairless: In that scenario, you bring the tape to a group of, say, 3-4 people who are also non-performing note buyers. Do you all ever create one entity that purchases all of them and then you split up ownership based on who puts in what in that entity?

Paige Panzarello: Some investors do do that. I am very fortunate in that the way that my business is structured, I work through a Delaware statutory trust, which most people know through 1031 exchanges, but that’s not the case here. So I work through a Delaware statutory trust, which operates very similarly to a series LLC. So I’m actually able to create series of my DST and give ownership to those 3-4 different investors, so I don’t have to create another entity to do that.

Joe Fairless: Okay. But it functions in the same way, so you all are in one entity together, but you split the profits based on who owns what. Is that correct?

Paige Panzarello: We can do that. It depends on the tape and the assets that we’re buying. Again, if we’re carving out notes where I’m taking all of Virginia or Texas, and they’re taking all of Ohio, we don’t necessarily do that. We just need to have an operating agreement that we’re both gonna put our money together, we go through a purchase and sale agreement, just like you would a house or an apartment building, and then we just divvy up, tell the seller who to make the assignments of mortgage or deed of trust, who to make what entity to make those out to. And that’s just a transfer of ownership document.

Joe Fairless: And the reason why I was asking – perhaps I should have led with this –  is I was wondering if there was an advantage for the person who has the tape, who had that relationship with the asset manager, and then brings it to the group. For example, if everyone invests the same amount of money into the entity that buys all of those notes, then the person who brought the tape would get 10% extra ownership interest because they brought it, and then everyone splits everything else proportionate to the amount of money they invest.

Paige Panzarello: Yeah, there’s so many different ways you can structure a deal, of course.

Joe Fairless: But you’ve never done it that way.

Paige Panzarello: [laughs] There’s so many ways. But again, I think because of the collaboration in this space, if we’re each taking our own separate assets, then there’s no need for me as the person who brought the tape to take an extra 10%. Again, pigs get fat and hogs get slaughtered. I’m just happy that we can collaborate together and buy the whole pool. I don’t need that extra 10%. It’s fine by me.

Joe Fairless: That’s interesting. So if there was a large tape, then the advantage for you to bring it to the group would be that you all would be able to close on it, whereas perhaps you wouldn’t be able to close on it as an individual. So there is the value that they’re bringing to the table. That’s where the collaborative part comes in.

Paige Panzarello: Absolutely.

Joe Fairless: I’m with you now. [unintelligible 00:17:43.12] What type of process do you go through once you have closed on it, and – congratulations, you have notes where no one’s paying on?

Paige Panzarello: [laughs] It sounds crazy, doesn’t it?

Joe Fairless: Nice job getting that one! What do you do next?

Paige Panzarello: [laughs] So we have teams in place… With note investing, I call it  very front-end loaded in terms of your due diligence. The beauty part about once you actually get to the closing table and you close on these – you now take the notes and you pass them off to your team members. I’ve got an amazing loss mitigation team, and they start with the borrower outreach. The beauty part about note investing is that we actually have 23 different exit strategies. And as you can imagine, after 2007 and what happened to me there, I’m very risk-averse. So when I’ve got 23 different exit strategies available to me to dispose of these assets and work with people, I’m in a pretty great place, and pretty happy.

Our loss mitigation team is our point of contact, and they start with borrower outreach. We typically only use four different exit strategies that are typical. We either have to foreclose – which is our least favorite, by the way; we could do a short sale, we could do a deed in lieu foreclosure, which just means that we accept the deed to the house as payment in full for the loan that we just bought, or we get to work with the borrower to get them reperforming… And that’s actually my favorite, because we are able to generate both chunks of money and streams of monthly cashflow, and help somebody to stay in their home.

We have a general idea, Joe, when we are reviewing and doing our due diligence prior to buying the asset what kind of exit strategy we would like to employ… But borrowers are people, so they sometimes tend to surprise us, too. [laughs]

Joe Fairless: Sure, I know. We’ve got some apartment units, and when you have a lot of families living under one roof in a centralized area, then there’s always gonna be something that surprises you.

Paige Panzarello: Oh yes, and everybody’s got a story, don’t they.

Joe Fairless:  Yes, they do. So if you’ve got 23 different exit strategies — by the way, are those written down somewhere on your website, or something?

Paige Panzarello: I don’t want to overwhelm people.

Joe Fairless: Yeah, we won’t go over it on this call, obviously… But is it listed somewhere?

Paige Panzarello: I do teach a workshop and we do go over some of the exit strategies. Again, I don’t wanna overwhelm people, because there’s a lot of information out there and it can be a bit daunting. But yes, if you come to the Building Wealth With Notes workshops, I do teach all that.

Joe Fairless: Okay. But there’s four that typically are your go-to. One is foreclosure – you don’t like that. Two is short sale, three is deed in lieu of foreclosure, so the owner is basically saying “Here, I’m gonna turn the house over to you, and then I’m not gonna get dinged on my credit, or foreclosed on.” And then the fourth is reperforming, so they start paying, whether it’s some workout scenario or not.

So three out of those four are you getting the property, or sales proceeds from the property, whereas the fourth is ongoing cashflow… But then with the ongoing cashflow, the disadvantage is it diminishes over time, because they’re paying down the mortgage. So I just have a hard time understanding – and clearly, it is possible, because there’s a lot of people who do this, yourself included – how you can make a good chunk of money doing this without massive, massive volume… Because there’s gotta be a cost for the loss mitigation team, plus you’re buying it at 40% discount or something, but after the time that’s spent to do this, and then after the foreclosure process, the short sale… How many deals do you need to do to make a million dollars in profit over the course of a year?

Paige Panzarello: That’s a great question. [laughs] It depends on how much capital you have to deploy at any given time. And it depends on the assets in your buy box, what you are looking at. If you only have limited capital and you’re only starting out by buying assets that are lower in value, then yeah, it’s gonna take you a little bit longer to get to the million dollar net profit. If you’ve got a little more capital and you can buy some of the higher-end assets, it’s not gonna take you as long.

There are note investors out there that have a lot of capital to deploy, and they will focus on assets that are valued over $200,000. So if you’re looking between 200k and 500k, if you’ve got capital to deploy that, it’s gonna take you a lot less time to get to that million dollar net profit.

Joe Fairless: Based on your experience as a real estate investor, what’s your best real estate investing advice ever?

Paige Panzarello: Best advice ever is don’t be afraid to fail, really. Successful people are successful because they have failed. If you learn from it, then you can get back up, and hopefully it’s not catastrophic… But so many people are paralyzed, because they’re fearful of failing… And they really need to change that mindset, and look at it like it’s a learning experience. All of us scrape our knees.

Compound that though with doing your due diligence. Due diligence in any form of real estate investing is paramount. It’s crucial. Because when you do good due diligence, you buy your assets well, and that’s when you make your money. You collect it when you exit, but if you do good due diligence and educate yourself about that form of real estate investing, then you really can mitigate your risk and do very well.

Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?

Paige Panzarello: I’m ready! Bring it on, Joe!

Joe Fairless: Alright, let’s do it! First, a quick word from our Best Ever partners.

Break: [00:23:45.12] to [00:24:27.28]

Joe Fairless: Okay, best ever book you’ve recently read?

Paige Panzarello: A couple of them. “Seven habits of highly effective people”, Steven Covey. Love it. “Three feet from gold”, Sharon Lechter and my personal mentor, Greg Reid. Love them.

Joe Fairless: Oh, I love that. I think I’ve read the first one… I feel like I have. I’ve heard about it so much. But I love “Three feet from gold.” That truly is a must read. What’s the best ever deal you’ve done?

Paige Panzarello: The best ever deal I’ve done was taking one of our non-performing notes and I was able to help a single mom who she and her husband divorced, and they had a couple kids, and she lost her job… And I was able to help her and her two kids stay in their home, get her to reperform, and they did not have to move. It was the best ever. She wrote us a beautiful letter, thanking us profusely. She was beat up by the big banks and we were able to  help her stay in her home. Nothing like that feeling.

Joe Fairless: What’s a mistake you’ve made on a transaction?

Paige Panzarello: Oh, boy… [laughs] I think that the biggest mistake — we all make mistakes, but the biggest one was in 2007 for me, thinking “This is not gonna happen to me.” Because I did see it coming, and I was naive in thinking that I was only leveraged 10% and it wasn’t gonna affect me. Boy, was I wrong… Because it did. It happened to me right on my head, and caused me a huge loss. But I’ll tell you, that shapes you as an investor, and it teaches you who you are, and how you relate to other people, and to money also, and how you treat money.

Joe Fairless: Best ever way you like to give back?

Paige Panzarello: A couple of different things… Again, I’m very about helping people, so I do teach financial literacy in the form of teaching [unintelligible 00:26:04.20] cashflow game, so I do that. People wanna know what I do, and how to build wealth with notes, so I teach a workshop to help people to create their own financial freedom… And I often get the question “Well, you’re teaching people to be your competition.” Like I said, this space is very collaborative, so I don’t look at it that way. I’m very passionate about helping people to build their financial future, and give themselves financial freedom, so that’s part of my giveback.

And then the other thing is that I’m very passionate about our veterans. I donate a lot of time and money to Operation Gratitude. It’s one of my things, and I eventually am going to be taking some of these REO properties that we are acquiring through foreclosure and I’d really like to be able to set up housing for our veterans across the country.

Joe Fairless: How can the Best Ever listeners learn more about what you’ve got going on?

Paige Panzarello: Well, the best way to reach me is to either direct-message me on Instagram, @thecashflowchick. You can go to cashflowchick.com. If you’re interested in scheduling a conversation with me, it’s free, of course; just go right to my website. And if they’re interested in Building Wealth With Notes, then they can go to BuildingWealthWithNotes.com to learn about the next workshop.

Joe Fairless: I loved talking to you and learning about your approach as a business person, and your focus on non-performing notes. Talking more about that, getting into the details of how you make money, exit strategies, as well as the sewer treatment plant; that was fun, too.

Paige Panzarello: [laughs]

Joe Fairless: So thank you so much, Paige. I really enjoyed our conversation. I hope you have a best ever day, and we’ll talk to you again soon.

Paige Panzarello: You too. Have a best ever day as well.

Best Real Estate Investing Advice Ever Show Podcast

JF996: How to Buy, Hold, and Sell Seller Financed NOTES

Seller financing is your creative method to cash flow and huge returns, and our guest is able to create, purchase, and hold seller financed notes.

Best Ever Tweet:

[spp-tweet tweet=”Secondary markets are ones to master as the competition is low.”]

Dawn Rickabaugh Real Estate Background:
– Owner of Note Queen Capital and specializes in owner-carry portfolio and been an investor for 13 years
– Buys seller-financed notes across the country and helps others get started investing in notes
– Consults in real estate transactions that involve owner financing, and buys & sells real estate
– Based in Carson City, Nevada
– Say hi to her at www.notequeen.com
– Best Ever Book: A Course in Miracles

Made Possible Because of Our Best Ever Sponsors:

Want an inbox full of online leads? Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Go to adwordsnerds.com/joe to schedule the appointment.


Buy Seller-Financed Notes


Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any fluff.

With us today, Dawn Rickabaugh. How are you doing, Dawn?

Dawn Rickabaugh: I’m doing great, thanks for having me!

Joe Fairless: Well, it’s our pleasure. Nice to have you on the show. Dawn is the owner of Note Queen Capital, and specializes in owner carry notes, and she has also been an investor for 13 years. She buys seller-financed notes across the country and helps others get started in notes. She is based in Carson City, Nevada. With that being said, Dawn, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?

Dawn Rickabaugh: I would love to, thanks Joe. Well, I graduated from college with a bachelor’s in nursing, and I worked in an ER, in an ICU and I raised for babies, and all during that time I would take these courses and think that I think I can be an entrepreneur some day. That day turned out to be 2004, when I put my nursing job on a dime; I still had four kids and two mortgages and three dogs, and I decided “Hey, I’m other gonna think or swim, but I’m gonna go for it.” I fell in love with the note business; I just love the financial calculator, I love being able to work that and figure out how to solve problems, and I just love how private money works; I stay away from bank financing.

Ever since I quit that job, I’ve been doing a variety of things, but what I do most is I buy owner carry paper. That means when somebody offers owner financing and they become the bank of their property, sometimes that want that payment stream, but then sometimes they need cash instead of the $800 or $1,500 that’s coming in per month; they need a lump sum of cash for something, and that’s where I come in with my investors, and we take down these investments.

Joe Fairless: How do you get a deal? Do you usually find it yourself and have the conversation with the owner?

Dawn Rickabaugh: That’s a great question. Everyone wants to know how do you find notes. A lot of people do direct mail, just like you do direct mail to find motivated real estate sellers – you can do that for paper. You can buy lists of people that have carried that paper and want to sell their property. For me, I’ve never done that; it doesn’t mean it’s a bad idea, but I end up attracting a lot of business to me because of my positioning in the marketplace. I’m talking directly with sellers, and I also have people that bring me deals, that are very good note brokers, note finders, and they find them in a variety of ways, whether it’s direct mail, Craigslist… Just other internet-based resources. So that’s the way I find them, and then investors – once you have a good deal, it’s not hard to find the money.

One person gets their friends and family involved, so the private money tends to grow organically, and so do the note leads. But the other thing that I really love is having this understanding the secondary market for private paper gives me a real advantage as a real estate investor, because I understand how to buy with owner financing and how to sell with owner financing, and how to get liquid either way, if I need to, to make the deal work. So to me, the best ever advice as a real estate investor, you need understand the secondary market for notes, because it will give you the edge that most investors just don’t even see.

Joe Fairless: I’d love for you to elaborate more on that in a second, but first, before you elaborate on that, I think what would be good is if you give us a specific example of a past deal, and tell us the story about the individual – how you came across them and why they ended up doing the deal with you in the way that you wanted it to be structured.

Dawn Rickabaugh: Okay, fantastic. I have several I can pull from this week. Here’s an example – it’s not my ordinary example, but it’s kind of fun to talk about… There’s a nice property in Laguna Niguel – a really [unintelligible 00:06:02.22]  of Orange County, California. They’ve been on the market, they need to sell, and they got an offer for their four million purchase price, but the buyer only wanted to put two million down, and he wanted another couple years to be able to pay off the balance. So that’s two million down owner carry, and that’s a very reasonable thing for the sellers to become the lenders and just say, “Hey, yeah, we’ll let him pay us monthly, $16,000/month and within two years he’ll pay us off”, except for they need to cash out because they’ve got an underlying bank loan that’s pretty sizeable that they just wanna get rid of.

So here’s the situation where the note sellers – they’ve got to sell the property for the price they wanted, in exchange for carrying terms; they could have made probably 250k-300k in interest just being willing to do that, but since they don’t wanna do that and they need to sell, they came to me and said “Can you structure this deal in a way that we can sell the note right after we create it?” So that’s what I’m doing in that situation, where they used owner carry to get sold, but they used the sale of the note to liquidate, to get a couple extra hundred grand in their pocket, plus get rid of that underlying bank loan that was making everybody nervous.

So what I get, besides a consulting fee to sort of puppeteer the whole thing, but I get to buy the note and add it to our portfolio, because I’m buying it at a discount. And because they brought me in ahead of time, we could minimize the discount that would be required, because notes can sell for 50 cents on the dollar, or 30 cents on the dollar, or 90 cents on the dollar, depending on how the whole deal is put together.

Joe Fairless: Okay, so you will have the note, and there is already two million paid down on it. It’s a four-million-dollar note, right?

Dawn Rickabaugh: Right. No, four million dollars sale price. Two million down, and a two-million-dollar owner carry note that I’m gonna be able to buy for 1.9. It was a very small discount because I was brought in in the beginning as a consultant to say “How do we cash out of this without being chopped off at the knees?”

Joe Fairless: So it’s a two-million-dollar note, and you bought it for 1.9, so there’s a $100,000 spread, and the best case scenario for you is that you get $100,000 over two years as a result of this person paying down the note.

Dawn Rickabaugh: Right, but you also have the face rate of the interest rate. So between the discount and the face rate that the borrower is paying, it works out about to 9%, and this is a very excellent collateral. The worst case scenario would be the best case scenario where you end up owning for two million dollars, plus legal fees – you end up owning this really killer property in Laguna Niguel. So that’s the best case scenario, if there’s a default. The worst case scenario is that me and my investors get to put almost two million dollars to work and make really a total of about 270k in interest over a two-year term.

Now, the thing that’s interesting about buying notes at a discount versus just I could have made a loan, but the borrower only wanted to pay 5,5%, no more. So most private lenders don’t lend at that. But they could get the owner to carry a 5,5%, but then the owner just has to discount on their side. It’s like the seller has sort of paid the points, in a way, to get liquid out of this, but what they were doing is finally being able to get out of a property that they needed to sell, and this is the best offer that’s come along so far, so it really worked for them on a multiplicity of levels… But here’s the deal – he gets two years to pay off the note, but if he pays it off early, technically on this there’s a $2,052,000, so basically there’s a $150,000 spread. So if he doesn’t ride it to maturity — let’s say he pays it off six months from now, in December, but I still get the whole balance.

So if the balance on the note from him – it still has a balance of let’s say $2,030,000 and I only paid 1,9, that honoring discount that you get when a note pays off earlier than expected, there’s a minimum yield of around 8,5%-9%, but if he pays off early, it will push us over 13% on this really excellent, safe investment. So that’s kind of the beauty of buying discounted paper, versus just making an origination, like a private money loan, or something.

Joe Fairless: That’s fascinating.

Dawn Rickabaugh: It’s about crunching the numbers to make it work. And then I can take it to a real small level too, because that’s out of the reach of most of us. I don’t buy four million dollar homes myself. [dog barking] Sorry about that… Someone let the dog in. [laughter] Okay, that was the best ever puppy in the world, so it actually works for your show. [laughter]

Joe Fairless: Beautiful, nice segue! Good save! [laughter] So on a smaller level…

Dawn Rickabaugh: Yeah, let’s just take it on a smaller level. Here in my hometown of Carson City, Nevada, somebody had a mobile home note. Let’s say they sold their mobile home for $22,000  and they took $10,000 from the buyer, so they ended up with a $12,000 note. Who’s gonna buy a note secured by a little mobile home in Carson City, where the space rent is like $425 and it’s first-lien position…? Well, this kid – he could receive those payments and it could be really well, but the problem was he needed to leave town; he needed to get liquid and just move and never look back. That was a Craigslist, actually. I had created a filter saying “anyone talking about promissory notes, drop it into my inbox.”

I got it while I was at the gym one morning, I called him, and I bought the $12,000 for like $6,000. He was thrilled. So it’s not a huge gain for me… Okay, I’ll double my money in the next four years, but little things like that stacked up really go a long way. So I solved the problem of the guy needing to cash out, and there’s not very much of a market for that. And also, I’m rehabbing and selling mobile homes on owner carry terms. So if someone doesn’t have all cash, I say “Hey, if you can put at least $5,000 down, I’ll carry for you”, so as a real estate investor I have the edge, because I know how owner financing works, and if I get tight, unliquid, I can sell off a piece of my note to get liquid again.

Joe Fairless: Was the actual Craigslist ad “anyone talking about promissory notes” – did you post that?

Dawn Rickabaugh: Yeah, I have this revolving “I buy property, I buy paper”, or anything promissory notes, owner carry – I’ve created filters, so that Craigslist dropped those in to me, and I also have an ad that just says I buy these things. But I keep revolving on Craigslist, and some of the guys that bring me deals, that hustle out there and are good at nailing things down, they find them on Craigslist or they’re just hustling out on the internet, and then others, they spend 5k a month on direct mail campaigns, and we’re able to convert those leads very effectively.

Joe Fairless: How did you get the lead in California, the Orange County one?

Dawn Rickabaugh: That’s all about positioning. I’ve spent my time building my business very slowly and organically, like the turtle approach versus the hare, where I’ve been blogging since 2008, I wrote a book back in 2009. I’m working on my second release this summer, which is gonna be a lot more fun to put out there, even than my first book, and then I did a lot of speaking. So I guess when you position yourself a certain way, then people care about you, they like you, they get to know you, and so they think of your when they have a situation. So a lot of times when a deal is falling apart… Even my neighbor, last year – she’s a realtor and she was double-ending this nice, sweet deal, $15,000 getting ready to drop in her pocket, except for the funding fell through. So she brought me in to save that deal from falling apart, and I know she bought a hot tub with that money and I haven’t been invited over yet to sit in it. [laughter]

Joe Fairless: How did you save that deal? What did you two?

Dawn Rickabaugh: We could have hit it two ways; the reason it fell apart is because the borrower — he had a big down payment, like 30%, but he couldn’t get the loan because he didn’t have the seasoning in the business, because they moved from a California business to a Nevada business, and they didn’t have two years in Nevada yet. So he couldn’t get a loan, which is absolutely ridiculous; he has a great credit risk. He could have gotten hard money, or I could have set him up with 9% or 10% money and 2-4 points [unintelligible 00:14:49.08] expenses. Then I looked at the seller and I was like “They’ve got great existing financing in place. The only problem is they’re 30k behind [unintelligible 00:14:57.08]” so that’s 5% financing. So I said, “Here’s the deal. Buyer has the money to get them all their equity and take over – not subject to, but we did a wrap, so that the people that are on the loan can’t get cut out of the deal by accident; they always have a play. Do you understand what I mean by “a wrap” versus “subject to”?

Joe Fairless: Elaborate, will you?

Dawn Rickabaugh: The borrower actually owes the seller and the seller owes the bank. So we need to make sure that the seller, if they don’t get their money from the borrower, that they have the right to foreclose and get the property back. If you take it subject to, if there’s a default and they start — well, in this case, the credit was crap anyway, because they hadn’t paid for two years, but they had equity still… But anyway, so they couldn’t step back in if they wanted to, because you need to have a way for the sellers to have a play to get back in the deal, so that’s why I use it as a wrap. Borrower owes seller, seller owes bank, and then we have a note servicing company to keep score for everybody. So when the borrower pays the seller, they know that the seller is paying the bank loan because he doesn’t wanna be paying, and then find out that it’s going into default. And the sellers actually want their credit to be rebuilt. So this was beautiful.

The buyer – he brought in a big amount of cash to give them all their equity and to bring the loan current, so then instead of paying 3 points and 10% for a private loan, he’s not leveraging the 5% bank loan that’s still on the seller’s name, and the sellers are gonna win because now somebody is rebuilding their credit. By the time that this is done, they’re gonna have 2, 3, 4 years of perfect payment history and it will rebuild their credit so that when they’re ready, they can go get another loan and start their lives over, and then by that time the guy can get a loan in his own name, because they will have sufficient seasoning of the business here in Nevada. So that’s where it was just like an epic win/win for everybody.

Joe Fairless: Yeah, what a deal… Thank you for this example. These are three examples that are just phenomenal case studies, for different reasons. I wanna ask one last follow-up question about the Orange County deal… You mentioned you put yourself out there, but specifically how did you get in contact with them? You talked about the things that you do, but did they reach out to you via a website, or what?

Dawn Rickabaugh: Yeah, they sent me an e-mail… I guess they’d heard me speak and we must have met years ago. The funny thing is this guy is actually an attorney, but when it comes to this stuff he calls me, because attorneys — it’s really great when they know that they don’t know everything… [laughs] So usually I’m educating attorneys about the secondary note thing. But he’s also a real estate investor, so he knew about this deal and he wanted me involved to help these people that he knew. This is actually the second referral that he’s brought to me, to help create a win/win solution for all the parties. And it doesn’t always involve a note to get sold, sometimes it’s a lease option, or we put a trust together… There’s not one hammer fits all, but when you understand the secondary market for notes and you can do that dance between property and paper, you just become a killer problem solver. And it’s not only fun, but it’s lucrative.

Joe Fairless: Feel free to repeat the secondary note thing, but… I have to mention it, because I’ve got this whole lead-up music too when I ask you, and it would just kill the whole show if I don’t ask you specifically… But you can repeat your answer, that’s fine. So what is your best real estate investing advice ever?

Dawn Rickabaugh: Learn the dance between property and paper. Learn how the secondary market for private paper works and you will have the edge over every other real estate investor that you perceive as competing with you and your market.

Joe Fairless: That is true. Just hearing you talk through these case studies… It’s 3.0 real estate investing, and it’s something that a lot of people don’t know about, and I’m grateful that you’re on the show talking about it, and I’m grateful that you spiced it up that go around… Instead of “understand the secondary markets”, you gave us a little “learn the dance between…”, so thanks for that too.

Dawn Rickabaugh: You’re welcome. I think people need to dance. Dance, and sing, and laugh, and have fun.

Joe Fairless: There we go. Well, are you ready for the Best Ever Lightning Round?

Dawn Rickabaugh: Oh, I have my little paper here.

Joe Fairless: Oh, okay… Well, I might have to ask you some questions that aren’t on it, just to keep you on your toes.

Dawn Rickabaugh: [laughs] Okay.

Joe Fairless: First though, a quick word from our Best Ever partners.

Break: [00:19:43.20] to [00:20:30.21]

Joe Fairless: Best ever music you like to dance to?

Dawn Rickabaugh: [laughs] Well, lately it’s country… Since I moved to Carson City, Nevada, I bought a truck, I bought a Harley, and I can do country dancing now. But don’t tell anyone.

Joe Fairless: [laughs] Well, I think we told a lot of people just now. Best ever book you’ve read?

Dawn Rickabaugh: Course In Miracles.

Joe Fairless: Best ever deal you’ve done?

Dawn Rickabaugh: Buying a non-performing diverse note that was in second position for $10,000 and nine months later getting $80,000 when it paid off.

Joe Fairless: Best ever way you like to give back?

Dawn Rickabaugh: Creating homes for families who are shut out of the system. They don’t have all cash, they can’t get a bank loan, but they still need stability for our communities and they need a home for the family. So that owner carry thing that I help make happen in my own backyard – that makes me feel good. And also sharing information, so people get inspired to do this in their own communities and create those financial solutions just one moment pop to another.

Joe Fairless: What’s a mistake you made on a deal?

Dawn Rickabaugh: Trusting a title company to do the right paperwork, to do it right, and then finding out they didn’t, and then I just wanna hit myself.

Joe Fairless: [laughs] What do you do now to mitigate that risk?

Dawn Rickabaugh: I read things. I take responsibility for all the documentation and paperwork, the due diligence. I kind of read stuff; just sort of reading things.

Joe Fairless: And where can the Best Ever listeners get in touch with you?

Dawn Rickabaugh: NoteQueen.com. And I also have a podcast – Owner Financing & Note Investing Podcast.

Joe Fairless: Alright. Well, we’ve got two ways then – the podcast, go check it out, as well as NoteQueen.com. Dawn, I loved the case studies; that’s one of the best ways to learn. You gave us the case study in California, the case study with the mobile home note, and the case study with your neighbor, and three solutions, all having a central theme of, as you said earlier, knowing the secondary market for notes and being able to structure it accordingly. I learned a lot on this subject in particular.

Thanks so much for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Dawn Rickabaugh: Thank you so much, Joe. It’s been a privilege. Take care.


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best ever real estate pro advice

JF974: Take Notes about NOTES and Debt!

Taking notes? That’s okay if you’re not, but you should at least buy notes! You’ll hear all about it in this episode! Good debt, bad debt, whatever… Notes are extremely profitable and if purchased correctly, may be one of the most ideal passive wealth generators in investments.

Best Ever Tweet:

[spp-tweet tweet=”If you are not focused on one thing, you will be less effective attaining your goal.”]

Scott Carson Real Estate Background:
– CEO of WeCloseNotes.com and the creator of the Note Buying for Dummies workshop
– Purchased over half a billion dollars in distressed debt for his portfolio and assets in over 30 states
– Note Buying Workshop focuses on the 3 F’s of Note Buying…The Find, Fund and Flip
– Speaker on distressed debt, the 2014 Note Educator of the Year, and featured in The Wall Street Journal
– Active real estate investor since 2002 and solely focused on the note industry since 2008
– Based in Austin, Texas
– Say hi to him at http://www.weclosenotes.com


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Real Estate Note Advice


Joe Fairless: Best Ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless and this is the world’s longest-running daily real estate podcast. We only talk about the best advice ever, we don’t get into any of that fluffy stuff.

With us today, Scott Carson. How are you doing, Scott?

Scott Carson: I’m doing great, Joe. Thanks for having me.

Joe Fairless: Nice to have you on the show, my friend. A little bit about Scott – he is the CEO of WeCloseNotes.com and the creator of the Note Buying For Dummies workshop. He is a speaker on distressed debt, and the 2014 Note Educator Of The Year; he’s been featured in the Wall-Street Journal, he’s an active real estate investor, been one since 2002, and has solely been focused on the note industry since 2008… So guess what, Best Ever listeners? I think you know what we’re gonna be talking about, don’t ya?

You can say hi to him at his website, WeCloseNotes.com. With that being said, Scott, do you wanna give the Best Ever listeners a little bit more about your background and your focus?

Scott Carson: We focus directly on buying distressed debt, only non-performing and first liens on residential and commercial properties all across the country, from banks and hedge funds. We’re buying for our own portfolio, we buy for students, but we’ve been doing that since everything hit the fan in 2007-2009.

My background – I started off like a lot of real estate investors, [unintelligible 00:03:24.15] Flip This House on AMC TV, we decided we could be landlords; I thought that was a cool idea. We bought our first investment property in 2002, the second one in late 2002 as well, and then the market changed here in Austin, Texas.

Dell Computers laid a lot of people off who were ideal tenants, and the market went South for a little bit. [unintelligible 00:03:45.11] and I was a distressed borrower very quickly. I was pretty lucky enough to get rid of those deals and get hooked up with a couple real estate investors here locally, who taught investing, taught the traditional way of doing things, and I was pretty lucky there to learn real estate the right way – options, subject to deals… They also taught [unintelligible 00:04:06.10] owner financing, things like that. So for 3-4 years I got to work as basically an apprentice and sponge up so much quality information from them.

Then when the market went South again with everything in the mortgage industry, I saw the opportunity and stopped focusing on short sales and subject to deals and fix and flips here in Austin, and I started buying debt all across the country.

Joe Fairless: You’ve been focused on note buying since 2008… What are the pros and cons of note buying, compare to buying rental properties, adding those into your portfolio? Because you’ve been on both sides.

Scott Carson: Yeah, I’ve been on both sides… It’s a great question; we get that a lot. First off, there’s a lot more inventory out there. There are still 6-7 million defaulted loans out there right now. Second, we’re often getting better pricing on the distressed debt than people are buying for rental properties. And then the third thing, you don’t deal with toilets and tenants. When was the last time you called Bank of America (if you got a Bank of America mortgage) for them to come unclog your toilet, or to fix your water if it goes out? You don’t have to do that with a bank, and that’s the beautiful thing about buying debt. We’re buying at a fraction of what most people are buying properties, at 50% of value or less.

We’re working to create win/win scenarios with the borrowers, trying to keep them in their properties by modifying the loan, doing a forbearance plan, and we’ve got a lot of exit strategies, but our biggest bang for the buck is when we can modify the loans, keep them in the property, and they start paying on time for 12-18 months and then we just either keep it for cash flow at a high ROI, or sell that loan off to another investor who’s looking for cash flow.

That’s what I like about it – instead of it being mailbox money, it’s wire money. I get an invoice every month from our servicing company telling me who has paid, and if they don’t pay, they don’t stay.

Joe Fairless: Cool. I wanna talk more about the pros, but then I also want to have – as objectively as you can look at it – the pros and the cons. Obviously, there are cons compared to buying rental properties. What are the cons?

Scott Carson: The cons is you’re the bank. There’s a lot more that goes into a distressed note than buying a property that you can put a renter in. When you buy a rental property, you own the real estate, so you can put a renter in there, you deal with all the management stuff or hire a property management company… When you buy the note, you don’t own the property. Now, you control it, but if you’ve got people that won’t pay, the biggest con is gonna be basically that you’re either gonna have to foreclose, or hire an attorney to reach out to that borrower to try to get him to do something.

Like I said before, they don’t pay, they don’t stay, but in some states it can take a little while to foreclose. In Florida it can take 12+ months to foreclose; in New York/New Jersey you’re looking at 2-3 years sometimes. There are states that are fast foreclosures, states like Texas, Georgia, Arizona, Nevada – they are easier to buy notes in, because you can foreclose so quickly.

I always tell people to expect to probably have to put 3k-5k in expenses along for attorney fees, servicing costs when you’re buying a note, because you’re gonna have to take over that bank’s nightmare.

That’s really the biggest con – you don’t know exactly which way the deal is gonna go. We’ve had deals that we thought would be easy modifications that turned into extended foreclosures of 12-18+ months. We’ve had others that we were getting ready to foreclose on that turned into the borrower just signing the property over to us and walked away, and left the property in clean conditions.

It’s the biggest frustration, but some people dealing with notes try to have one business model “I’m gonna foreclose all the time.” Well, it doesn’t always work that way. That was the biggest mistake I made early on – I started buying notes, Joe… I planned to foreclose in everything, and I left a lot of money on the table and spent a lot of money, when I could have modified loans initially, had cash flow coming in, not had to put up repair costs, not had to put up foreclosure attorney costs, and start making money immediately.

Joe Fairless: Can you walk through an example of what a foreclosure process would look like, compared to a loan modification process? Just trying to get an idea of the costs and the people involved in each of those.

Scott Carson: Okay, well let’s start with a loan modification. Once you’re buying out, you’re reaching out to the borrower. Half the states will let you do that yourself if you want to, other states wand you to be a licensed mortgage broker. I always recommend that you have a licensed servicing company do this; you don’t wanna do this yourself. So you have your servicer, they’re making 4-8 phone calls to reach out to the borrower; hopefully the borrower responds. If they don’t respond, they’re also sending direct mail campaigns out – certified letters, “Hey, give us a phone call.”

We’ll hire a realtor or a door-knocking service to go out and make contact with the borrower. Our biggest goal is within the first 30 days to make right party contact with the borrower and find out what their plan is. If they’re gonna tell us to pound sand or go do something else, that’s fine, we’ll send it straight to the attorney and start the foreclosure process.

If they decide to modify, then it’s a matter of figuring out “Okay, what was [unintelligible 00:09:03.02] payment?” What’s market rent for that same type of property is what I like to look at, because that’s gonna basically be what the borrowers are looking at – “Can I move out and rent something similar?”

We use the market rent rates of the property to figure out, “Okay, your mortgage payment is $1,500, market rent rate is $1,800. You should probably just start making your payments on time. We’re not really gonna adjust that down much for you, because if you moved out, you’re gonna go pay more, so it’s better for you to work with us.”

Then we’re sending the documents for him to sign and send back in. The trial payment plans will be anywhere from 3, 6 to 12 months, depending on what the borrower and we can come to an agreement. Sometimes we’ll reduce the interest rate, sometimes we’ll make them pay 6-12 months on time before we reduce principal [unintelligible 00:09:48.00] but there’s all sorts of creativity with those modifications of trial payment plans to really get some home runs as far as ROI.

We’ve had borrowers bringing anywhere from $500 to the table or $10,000 to modify that loan.

Joe Fairless: One question about that process… Who’s doing the negotiations with them? You said “Hire a licensed servicing company to reach out to the borrower.” Are they also negotiating with them on your behalf?

Scott Carson: They are. They’re notifying us, “Hey, I spoke to John Smith today. Here’s what they would like to try to do. Does that make sense for you?” and we’re going back and forth either via phone call, conference call or e-mails.

When I buy notes, I tell the services what I’d like to do, then I give them some guidelines of what I’m looking for.

Joe Fairless: For example?

Scott Carson: For example if the borrower can’t bring at least four months of back payments to the table, we’re not gonna modify. We’re gonna offer cash for keys at that point. If they bring four months to the table, great, we’ll look to keep them in the property. But if they can’t bring that, they don’t have any skin in the game… Any time that you modify a loan or do a trial payment plan and the borrower doesn’t bring any skin into the game, they end up defaulting later on and you’re on to foreclosing.

So I’d rather just “Hey, instead of us fighting over this, let’s just make this a win/win. If you can’t really afford it based on what you’re telling me your financials are, let me just give you some cash to walk from the property and let you start over.”

Joe Fairless: Okay. That’s helpful, thank you. So you said if they decide to modify, then you figure out what the market rent is and then you either charge them that, or if their principal payment and interest and everything is lower than that, then they might as well just pay that, versus the market rent, because they’re gonna have to pay higher if they were to leave. Then what’s the process?

Scott Carson: If they decide to leave, Joe?

Joe Fairless: Yeah, if they decide to leave.

Scott Carson: Yeah, if they decide to leave, then it’s basically just getting to one of our local attorneys in that state or that city, deciding over documents — we always run title reports to make sure there’s not any other junior liens behind ours. If there is liens, then we may have to do a foreclosure, or we’ll get the bar to agree to a consent to judgment to speed up the foreclosure timeframe.

If there’s no other liens behind the property that we don’t wanna negotiate down or are glad to pay off, like weed liens or even some credit card debt, stuff like that – we’ll just pay those liens off to take the property back, depending on what we paid for the property.

It’s a pretty simple process. They show up [unintelligible 00:12:07.00] they leave the keys with our attorney, then our real estate agent goes by and changes the locks to the property, and we follow documents, now it’s an REO to us and we do whatever we want with the property at that point.

Joe Fairless: I know this is gonna be a tough question because it depends on the particular opportunity, but roughly what are the costs involved with the loan modification process? And I’m gonna ask the same question about process and cost for the foreclosure process.

Scott Carson: Right. Modification – I’ll say you’re probably gonna pay about $1,500 in servicing fees and paperwork. You have to pay an attorney to create the modification documents, to get that filed… You’re probably gonna see $1,500 roughly. If you’re gonna foreclose, you’re probably gonna see somewhere between $1,000 to foreclose in a state like Texas, all the way up to $5,000 on average in Florida, which is like 12-18 months to foreclose.

We have had situations where it took longer… I’ve had one asset take two years to foreclose in Florida. It cost me 6k in foreclosure fees, and then I also paid 10k to the borrower to expedite it and quit fighting with him. I was buying the asset at 35k, it was worth 100k, so it made sense for me to pay him 10k to walk away.

Joe Fairless: In that case… In Florida, as you mentioned, it does take longer, but how does it get strung out to two years?

Scott Carson: [laughs] That’s a good thing. One is sometimes they hire attorneys that will drag stuff out. Now, Florida was taking about 12 months or this timeframe, which is you’re just waiting on a judicial foreclosure timeframe. The attorney for the borrower filed a couple delays. My attorney showed up to court one day and didn’t have all the original documents that she needed to have to proceed, so that delayed it 90 days.

Joe Fairless: Oh, gosh…

Scott Carson: Yeah, especially they requested me to fly out there and show up as a witness. So it was a little frustrating, because I had some airfare costs and hotel fees, but it was still a win/win, because we bought the note at such a cheaper price. But you have delays that happen like this… Sometimes you’ve gotta re-file assignments. Now, we’re foreclosing a couple properties in Chicago right now… I call it Crook County, because it’s just taking forever to foreclose, the judges have given the tenants and the borrowers extra time upon extra time upon extra time, the sheriff doesn’t want to enforce the evictions of the tenants… I will never buy another note in Chicago. I’ll buy in other areas in Illinois, but never in Crook County again.

Joe Fairless: Yeah, it’s interesting how different counties and states approach this process.

Scott Carson: It is. Some are really easy, some will do everything online, show up, bam! It’s easy, done. Other times you’ve gotta show up in person and drag stuff out… But that’s what keeps it so interesting, Joe. There’s a lot of great things. I always tell people to start investing in five states, pick up five states. You’ll learn a lot about the different foreclosure laws and things like that, but you also have plenty of opportunity with deal flow, as well.

Joe Fairless: I believe you have access to distressed notes, and you mentioned earlier that you have people who invest, or your students, who go in the process… But let’s just assume your program doesn’t exist. For an investor who’s listening to this and they wanted to do distressed note investing, where do they go to find those notes, and where do they go to get the licensed servicing company?

Scott Carson: Really easy – there’s specific departments inside of banks and mortgage companies all across the country. That’s what I started off doing – calling these banks, and real estate funds and mortgage companies. If people get one thing out of this podcast with you today, they should get this – the individuals inside of the banks, they go by the names of either special asset managers, or secondary marketing managers. They also have a chief credit risk officer… It’s often sometimes the name of the department. So those three names: special assets, secondary marketing and chief credit risk officer.

You’re not going to call customer services. You can go to LinkedIn and search for special assets managers or secondary marketing, and literally, LinkedIn will show you close to 8,500-9,000 special assets managers from banks and lending institutions all across the country.

I like reaching out to those guys and gals because they are the people who handle the portfolio, they know what’s performing, what’s non-performing, they know the nightmares, loans that the bank is looking to get rid of, and that’s a great source to find assets. We do it on a regular basis here, and it’s actually helped us build a large database of bank asset managers that we reach out to on a regular basis.

Servicing companies – all you have to do is google “loan servicing companies.” You’ll find them all across the country, there’s hundreds of small companies that will service loans just in that state, or other larger companies that will service loans all across the country. They’re there to help assist you in getting your loans performing; they’ll also handle performing loans, if you set up on payment plans.

Those charges will run you from $20-$75/month/loan. If you’ve got a performing loan, the servicing company will charge you $15-$20 just to collect the payments and set up the statements. If it’s a non-performing loan, they’re gonna charge you somewhere between $75-$100/month to handle [unintelligible 00:17:11.23]

Joe Fairless: It seems really inexpensive.

Scott Carson: It is when you consider what your time is worth. [laughs] Some people – I won’t say a lot – try to do that themselves, and when the CFPB and the Dodd-Frank laws and all that stuff — you don’t wanna mess around with it. So if you’re not a licensed mortgage broker or a licensed debt collector in a state, your time is better spent finding assets or raising capital and closing deals.

Joe Fairless: What questions should you ask a loan servicing company that you reach out to about doing this for your distressed note?

Scott Carson: Good question. 1) What states are you licensed in? There are some services out there that aren’t licensed in all the states, but they’re still trying to service loans, which is a big, messy thing. 2) Do they have a list of real estate attorneys across the country that you can use? 3) Can you speak to the real estate attorneys that they recommend? Some servicing companies wanna be the go-through, where you’ve gotta deal with an account rep and they’re the middle man to give any information. I will not deal with servicing companies that want to be that filter. I wanna speak to the real estate attorneys directly. I’ll often hire my own real estate attorneys; I use attorneys I’ve been using for years, and the servicing company will just charge me $35/month to board their loan and wing in all the loss mitigations to our attorney’s offices.

Joe Fairless: Do you still look for new loan servicing companies?

Scott Carson: I actually have three different loan servicing companies right now that are managing our portfolio. I do get bombarded with new companies here and there… It depends on the situation. If I’m buying loans from a source that was with a new servicing company that I am not currently using, it depends on where it is in the foreclosure process. If it’s almost all the way through the process of being foreclosed on or less than 90 days out, I’ll just leave it with that existing servicing company.

Servicing companies are a lot like vendors – sometimes they’re good, sometimes they’re bad, like anything else. Sometimes you do start looking for other vendors, especially if your servicing company starts to lag behind, starts goofing up on sending out documents and notices and things like that.

I haven’t had to look for a new one in some time, because I’m pretty happy with the two out of three that I’m using right now. The third one, basically they’re just boarding our stuff and we handle everything with our attorneys on a direct basis.

Joe Fairless: Just to get a sense of the type of typical profits that you’ll make on a deal… Can you give us a case study of just not your best, not your worst, but a typical deal, and the amount of money you make?

Scott Carson: I’ll give you a very simple formula that we look at doing. We buy assets at — I don’t go above 50%-55% of value. 55% is when you add in taxes owed. If I’m gonna be at 55% and I’m gonna end up having to foreclose, I’m probably gonna see another 3-5% in fees, so I’m gonna be at somewhere around 60%.

If I sell it 90-95 cents on the dollar, either a foreclosure auction, or if I have to take it back and sell it, I’m gonna see somewhere around 15%-20% of fair market value profit. Now, that’s often a really good return, because a lot of times we’re doing this in six months or less, so it’s doubling up our ROI when you annualize it. That’s via the foreclose.

If I’m gonna modify, I’m always looking to see around 20%-25% yield on the payments that are coming in for 12 months. That’s what makes it worth my time, that’s what makes it worth my investor’s time, any joint venture partners that we work with, if we’re having to split payments on that stuff.

So we’re looking for a 20%-25% yield on a modified or a potential modification, all the way up to a 25%-30% yield on our money, if we have to foreclose in a 12-month timeframe.

Joe Fairless: You mentioned earlier 3-12 months of trial payments – why only 12 months? Why not 36 months, or something even longer?

Scott Carson: Usually after 12 months they’re gonna wanna change; borrowers are gonna want some change to happen. Either the market value of the property is gonna go back up, or the property value may decline. So anytime we try to do a  36-month trial payment plan, it never succeeds.

Another important thing is once you’ve gotten 12 months of payments on time, that loan is now considered a reperforming loan again, and the value of it is much better or higher now, it’s worth something more. You’ll have people that will pay 85-90 cents on the dollar for a reperforming loan with 12 months of seasoning. If it’s got 36 months of seasoning – that’s great, but after 12 months you can sell that note off at, like I said, 85%-90% of value, pretty fast. Plus, I’ve been in [unintelligible 00:21:42.01] I’ve helped plenty of people modify the loans; 12 months they’re paying on time, they’re taking care of the property, they like it now that they really kind of own that property again and the bank is working with them, especially if they brought some skin in the game; if they brought four months of payments or 5k down to reinstate that loan, then they’re much more willing to work with. They have some private ownership again and they’re taking care of the property, keeping the insurance paid on it, and dealing with some stuff.

If you start looking at three years of trial payment plan, that’s tough for people sometimes. I’m not saying people are always gonna be on time; there’s times people are gonna go late anyway, especially around Christmas or January… What we have built into our modifications is we [unintelligible 00:22:19.23] and forgive the December payment if they pay in advance for 12 months, and I tell them “Go have a Merry Christmas on us.”

Joe Fairless: I have found that with my properties also, with the apartments…

Scott Carson: Yeah, exactly.

Joe Fairless: And then in March the money all comes back, because they get a tax refund…

Scott Carson: Yeah, exactly. It’s always funny — that catch-up usually comes around the middle of February, after they gather their tax returns.

Joe Fairless: Yup, absolutely. Last question and then I’ll ask you the money question… When you have the 12 months of payments that was on a distressed, non-performing note and now it’s performing – okay, you’ve got it; where do you go to sell it?

Scott Carson: Good question! There’s a variety of different hedge funds out there that are looking for just reperforming loans; they like the yield. There are banks that will buy reperforming loans, there’s a lot of IRA investors looking for a solid, steady return inside of their IRAs… We’ve sold our performing loans anywhere from like a self-directed IRA event, like Quest IRA or NewView, all the way to even listing it on Craigslist, say “Hey, we’ve got a performing note that’s been performing for 15 months. We’re looking to sell it at 50k. It would be a 15% return on investment based on the payment stream to an investor, if you’re interested. It’s pretty easy going to local real estate investment clubs, LinkedIn in the different real estate groups, Facebook groups… We’ve sold performing loans in a variety of places.

Joe Fairless: Based on your experience in real estate, what’s your best real estate investing advice ever?

Scott Carson: Best real estate investing advice ever – I would say be focused… [laughs] A lot of real estate investors go to different workshops and seminars and they’re trying to do 3, 4, 5 things, and they can never get any traction because they never focus on one thing. We see that a lot… We see people going “Oh, I like the idea of notes. I’m a landlord” or “I’m a fix and flipper, I wanna buy notes for fix and flips.” Well, they never get around to being focused on one thing to develop those relationships, develop those habits, develop the systems to find success. It’s the whole 80/20 rule – if 80% of your income is coming from 20% of your focus, well if you were to focus all your focus on it, your income would be basically 400-500 time what it is. I think that’s the best advice I can give anybody.

Notes aren’t always for everybody. If you like the tangible side of going out and using a hammer and a nail, you’re rehabbing a property, you like apartments, you like things like that – that’s great, stick to that. If you’re having trouble with that, notes might be a great way to do it if you don’t wanna deal with the headaches and toilets and tenants or the fix and flip aspect.

Joe Fairless: I love that advice. Alright, are you ready for the Best Ever Lightning Round?

Scott Carson: I am, hit me up, Big Ben! [laughter]

Joe Fairless: Alright, let’s do it! First though, a quick word from our Best Ever partners.

Break: [00:25:03.20] to [00:25:44.25]

Joe Fairless: Alright, here we go – what’s the best ever book you’ve read?

Scott Carson: Very easy, Outwitting The Devil.

Joe Fairless: Really?

Scott Carson: Yes! Outwitting The Devil, by Napoleon Hill and Sharon Lechter. It is an amazing book. We give dozens and dozens of this book away to our friends and family [unintelligible 00:25:59.04] It goes in line with what I’ve talked about earlier, my best advice about being focused. The book talks about – if you’ve never read it before – how Napoleon is having a conversation with the devil, and why is he so successful at having people fail. The devil says, “Well, I’m successful because I get people to drift. They get the shiny object syndrome, they’re never focused… They’re never able to achieve that type of success if they aren’t focused.” That’s hands down my favorite book of all time, Outwitting The Devil.

Joe Fairless: Alright. I’ve read that, and there have been multiple people on the show who have mentioned that book. I just couldn’t get into it, but maybe I need to relook at it, because clearly some smart people are enjoying it.

What’s the best ever deal you’ve done?

Scott Carson: Best ever deal we’ve done… Man, I’ll say probably the biggest deal we’ve done individually – we bought a portfolio of 200+ assets that were worth about 12 million that we picked up for just over a million bucks. It’s been great, we’ve been modifying those loans, we had some that we foreclosed on, but it’s been a really growing period, going from buying one-off loans to small pools… That’s been one of our largest pools so far of assets that we’ve bought.

Joe Fairless: What’s the number one risk for an investor? Say you found another 12 million dollar portfolio, you bought it for a million and you brought in one investor with a million dollars. When she asks you “What’s the number one risk?”, what do you tell her?

Scott Carson: The number one risk is not knowing our property values or checking taxes. There’s three things with notes that you’ve always gotta double check. You’ve gotta make sure your property values are accurate – and that doesn’t mean going by Zillow photos; that means literally having somebody drive by the property.

We made a mistake early on in our business where we trusted a realtor to drive by. She took great photos of three sides of the property, but she missed the big, gaping hole on the other side… [unintelligible 00:27:50.18] So using realtors, making sure that we tell them, “Hey, please look at all sides.” We wanna make sure it’s a Blazing Saddles house. That’s the biggest thing, knowing your values.

Second thing is double-checking taxes. You’ve always gotta double-check the taxes owed, and you wanna make sure that the borrowers’ name on the note matches up with who’s on the county records. If it’s a different name, that property was probably gonna [unintelligible 00:28:11.24] and your note is now worthless.

And third thing is checking title. That’s pulling a title report, or as we call it, an O&E report – Ownership and Encumbrance Report is kind of a watered down title report that just shows us what the condition of the lien history is and if there’s anything else on title that might be blocking our ability to foreclose. Those three things are the biggest things.

Having your vendors in place is also critical. If you buy a lot of notes, you wanna make sure you have your systems down, because you don’t wanna sit around for 6-12 months figuring things out while your fruit is [unintelligible 00:28:42.13]

Joe Fairless: The 12 million dollars worth of property, you said over 200 assets, so I assume over 200 homes…?

Scott Carson: Yeah.

Joe Fairless: How long did you have from when you were notified that there was a potential to buy to when you actually wired the money?

Scott Carson: We had 60 days. 60 days to do the due diligence, and then we also wrote into the contract a six-month buyback period. We had six months to finish up our due diligence. This was an end-of-year closing, so we had to fund by December 27th… And we had six months to review the assets. If they were trashed out, [unintelligible 00:29:19.17] We also got a credit for the taxes owed over that six-month period if we had to send them back. That was a really nice [unintelligible 00:29:26.29] this property is trashed out or just an empty lot now, we swapped it out with new assets.

Joe Fairless: And you said you’re still in the process of turning that thing around, so you don’t know what your returns are as of yet?

Scott Carson: Our returns have been very, very positive. The investor got their money back in the first six months after our six-month timeframe. So within 12 months we got their  money back, and we’re splitting profits on this stuff. I still own some of the assets still to this day, and they’re performing; we’ve got some that have been performing for a while that we’ve sold off, others that we have taken down and foreclosed and kept them as rentals or turned them in REO sales. So it’s been a very phenomenal return.

The assets I still own are worth – on my side – four million, and I don’t have a penny into the game. It was all with private money when we funded the deal, so I got basically four million dollars worth of assets for nothing.

Joe Fairless: What’s the best ever way you like to give back?

Scott Carson: Best way I like to give back – we have a big, big passion for two sets of individuals: we work a lot with young kids, we always like to donate to Toys For Tots at the end of the year, along with different children’s charities. We do a lot with a [unintelligible 00:30:31.29] in San Diego where they go out and perform surgeries for children with face deformities, and we also have a big passion for helping past and present military and first responders. We love working with those guys, whether it’s Wounded Warriors or other charities that help out with our past and present military.

We provide education classes for free to those guys, and just really love helping those out because they’ve done a big job in helping us have the freedoms that we have today.

Joe Fairless: What is a mistake you’ve made on a deal, that you would do differently if presented the same opportunity?

Scott Carson: I think probably a couple of those would be with our Chicago deals. We bought stuff and we foreclosed on stuff in Chicago before, around Chicago, Illinois… I would probably have talked to my attorneys a little bit more [unintelligible 00:31:18.02] and what they expected the timeframes to be, and double that timeframe. If they said six months, plan on a year; if they said a year, plan on two years.

We’re still gonna come out making our money back and giving our investors a good return on their money, but some of the things that have happened up there have been outside of our control and outside of our trainees’ control. It’s just kind of ridiculous.

Joe Fairless: Where can the Best Ever listeners get in touch with you?

Scott Carson: The Best Ever listeners can get a hold of me at WeCloseNotes.com.

Joe Fairless: Well, I loved our conversation. I am always educated whenever I talk note buying with someone, and you certainly educated me a lot, from questions we ask loan servicing companies to the three primary things we look for during due diligence, which is the property values, the taxes and the title, as well as the cost implications and timing implications for loan modification versus a foreclosure, and then even sprinkling in some of the states that are more and less friendly to the process.

Thanks so much for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Subscribe in iTunes and Stitcher so you don’t miss an episode! https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

Best Ever Real Estate Show Banner

JF936: How to Raise MILLION$ to Buy Notes #SkillSetSunday

Raising money to buy debt, that’s correct… Sounds strange but it pays off! Our guest has been a previous guest on the show and he is a successful investor with many hats, and today he is sharing with us how it’s possible to raise millions of dollars to purchase notes. You don’t want to miss this!

Best Ever Tweet:

[spp-tweet tweet=”Raising money is a relationship trade, be professional and extremely focused.”]

Dave Van Horn Real Estate Background:

– President of PPR Note Co., managing several funds that buy, sell, and hold residential mortgages nationwide
– Over 30 years of residential and commercial real estate experience
– Also is a Blogger, national speaker, and founder of Strategic Investor Alliance (SIA)
– Began as a contractor and has done everything from fix and flips to Raising Private Money
– Based in Philadelphia, Pennsylvania
– Say hi to him at http://www.pprnoteco.com


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Chris Clothier and Joe Fairless

Joe Fairless: Best ever listeners, welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We don’t talk about any fluffy stuff, we only talk about the best advice ever. I hope you’re having a Best Ever weekend.

Because it is Sunday, we’re doing a special segment called Skill Set Sunday. By the end of our conversation you’re gonna come away with a skill that maybe you didn’t have before, or perhaps you’ll hone your skill. The skill that we’re gonna be talking about today – I love this topic – raising capital.

We’ve got our Best Ever guest, Dave Van Horn, who is going to raise at least 50 million dollars this year, and has already raised 50 million dollars. Dave, how are you doing?

Dave Van Horn: Hey, thanks for inviting me to the Best Ever podcast, Joe.

Joe Fairless: My pleasure. Well, if you recognize Dave’s name, you are a very loyal Best Ever listener, because Dave was on episode number 39, way back 12th October, 2012. You were one of the first episodes that I did when I started doing this thing daily. I started being a psycho about it, and I was like, “You know what? I’m gonna do  the podcast daily and see how it shakes out.”

In episode 39 he talks about his best advice ever and more of his background. We’re not gonna talk about that in detail, we’re gonna talk about raising money and what he raises money for. He’s based in Philadelphia, Pennsylvania. You can say hi to him at his website, it’s in the show notes page.

Dave, do you wanna give the Best Ever listeners a little bit about your background, just to get some context?

Dave Van Horn: Sure, Joe. The last podcast was more about my real estate background. I started in construction, became a realtor when I was 26, then became an investor, and then did fix and flips and buy and hold. Then I became a lender, and then got into notes. My primary role in the notes space is as a fundraiser. Then I did a bunch of stuff in-between: I sold insurance, I did property management, I traded options, and then I had a wife and two kids, too… But all those things played a role into what I can do today.

My actual fundraising started over time through the real estate side. I started out with the typical real estate investor, where they’re raising money for one deal, or eventually drift into private money or hard money, and then it just morphed and morphed and morphed, and I eventually got into raising commercial real estate capital. I did that, and then off into the notes space. So it kind of evolved.

Joe Fairless: Right now, in your role, you are raising money for what?

Dave Van Horn: Primarily – I wear a few hats, but primarily I’m heavily into the notes space, which is one of the four family residential mortgages nationwide, and we buy from the big players and the banks. We buy large quantities of distressed mortgages mostly, and we don’t deal in commercial and we don’t deal in unsecured or student loan debt, or that type. So we’re in the debt space, basically.

Joe Fairless: Let’s add some context to that for perhaps some Best Ever listeners who aren’t familiar with note buying. I’ve never done note buying, so I don’t have direct experience in it. When you raise a million bucks and you buy a million dollars worth of residential mortgages, it’s different from, say, when I raise a million dollars and I buy an apartment community, because I’m raising a million and I’m putting a loan on it, whereas you’re raising a million and you’re buying the loan, is that correct?

Dave Van Horn: Yes, you’re right. We can’t really leverage like you could. When I raised capital for commercial real estate in the very beginning, I was doing it with mobile home parks, for example. We bought 32 million dollars worth of mobile home parks and we raised 8 million dollars for down payments, closing costs and fix-up. So you can see, you’re able to leverage to financing – whether it’s owner financing or bank financing; in the resident note space, you’re putting it up cash, but you’re buying it at a big discount.

Some loans can be releveraged; first mortgages are easier to releverage for the bank, but it is much more difficult buying distressed assets and saying, “I want a loan on that”, because think about it – they wouldn’t get their mind around “How can you collect on what they can’t?”

Joe Fairless: So you’ve raised money for mobile home parks, and you’re primarily raising money for notes. Who are your business partners who are bringing the equity? I’m not looking for names, I’m just looking for — yeah, I want their social security number, they bank account number… No, I’m looking for how you know them, that’s the root of the question.

Dave Van Horn: It’s funny that you say that, because my fundraising started in the real estate side, and in the very beginning I actually started a group called REING (Real Estate Investor Networking Group), and actually it still runs today. There’s a branch in Chicago and one in Philadelphia. When we first started, it was 12 people at lunch, and over a six-year period, we ended up in five states and six cities, from Baltimore to New York. Obviously, it grew, and we have about 8,000 people in our database. That was before the crash, in around 2008.

We had this real estate group, and one of my roles in the group — we did networking, we had dinner, people would bring their deals to the meetings that we did monthly, and I used to interview the speakers. What would happen over time was people would come to me saying, “Can we present to your group?” and a lot of times I’d get an opportunity to raise capital for them. I had a large network, so they would say, “Hey, would you help us raise money for mobile home parks [unintelligible 00:07:59.15] and commercial offers, condos, and things like that. That’s how it started.

Then one of our speakers happened to be a gentleman out of New York who was raising capital for pools of distressed mortgages. Of course, he came down and spoke, and everybody thought it was a great idea, and of course I didn’t do anything for like three years… But I had a partner who did, and then around the time of the market changing, we were like — my one partner today was a former lender and I was a real estate guy, and we were like “Hey, which side of the fence do we wanna be on in this downturn?” We reached out to the guy in New York and he showed us the collection side of the mortgage space; he knew we can raise capital, because we were doing it for commercial real estate.

So it’s definitely a little bit harder to raise money, especially… We started out in second mortgages, so I’ll give you an idea, Joe… You know what it’s like with an apartment space, for example – it’s much different to raise money for apartments or mobile home parks than it is to raise it for delinquent upside down second mortgages with no equity in bankruptcy. [laughter] If you can raise money for that, you can raise money for anything.

But I was fortunate and really blessed that I was able to learn from this one company who was in New Jersey and they were raising money for mobile home parks in Michigan and Indiana, and they did have one place in Pennsylvania. The beauty of that was by raising capital for them, I was able to learn how to raise capital and get paid to do it. That part was really cool.

It was a situation where the deal was good, but their partnership turned bad. But I learned a lot… The new venture appeared in the REING group with the note space. It was like a blessing in disguise. I think the reason I have the success I have today was through some of the hiccups along the way earlier on.

Joe Fairless: I wanna focus on the delinquent upside down mortgage in bankruptcy raising money part, but I do have a question just to close the loop on the mobile home stuff. How were you compensated? How did you know what to charge them for helping gather everyone to raise the money for their deals?

Dave Van Horn: Most of the time it’s through points or a salary plus bonus, that was typically how we were set up. We have different entities. The one deal was like four mobile home parks, and then some of the other mobile home parks were individual parks, but they were all over a hundred units. Then one storage center sat by itself, and the other storage center was part of a park.

There’s a lot of owner financing in that space. That’s a fundamental difference I see today between mobile home parks and apartments – the apartments are easier to get financing on. It’s kind of the same way in the note space… I said seconds are hard to leverage, but first mortgages are easier to leverage; well, it’s the same way if you compare mobile home parks with apartments – apartments are much easier to leverage (the banks can get their mind around that), whereas mobile home parks, it’s a little riskier, it’s a motor vehicle title, it has all this nuance to it, so it’s a little different animal.

Joe Fairless: Just to give a Best Ever listener an idea of what they could make… An example where you raise money for a mobile home park and you’re part of the LLC and you get a salary plus bonus or points – how much is that? How do you know to say “Yes, I’m worth this much because I’m gonna help you raise a million bucks”, or whatever you did?

Dave Van Horn: Well, I was pretty naive back then. We were typically paid points, or… What we were really doing was a lot of times the minimum investment was pretty high – a quarter million dollars was the minimum investment in some of these vehicles… So we didn’t always have a quarter of a million dollars, so we would start our own entity and maybe create 11 shares at 25,000/piece, but the 11th share is my share, and I didn’t really put any capital up. That was one way.

Then sometimes we were bonused from the company for raising money from them, so it was a combination of things. Sometimes we were paid for our marketing expense, and then on the other side we were paid through a piece of the action by putting the deal together, so to speak. So you can get paid both ways… We were fundraisers and investors as well, me and some of the other people raising capital for the group.

Joe Fairless: Now, I love how you said earlier “If you can raise money for delinquent upside down mortgages in bankruptcy, you can raise money for anything”, and I agree. Tell us what insights have you acquired that help you raise money for the perception of what I just said?

Dave Van Horn: [laughs] It’s kind of like “what’s the best advice on that”, right? It’s kind of like honing in on what you’re best at, and that took me a while to figure out in my life. At the time, I did all these crazy things… You’re like “This guy’s unbelievable, how can he do all these things?”, but it was really like a search to figure out what you were good at. What it turned out was that I was really good at this capital side of things… It’s not so much what I do, but how I do it, and it’s about focusing on my strengths, not my weaknesses. I’m not very good at guitar or speaking French, and I could study my brains out and I’ll probably be mediocre at best…

So it’s focusing on what I’m good at, and it’s really about the way I do it – I think it’s by helping people. In the beginning I almost went down the path of the typical guru at first, and gladly switched gears, because what I realized was it’s really about me sharing and helping other people build and preserve their wealth, that type of thing, whether it’s through education and things like that, or low-cost information, books…

It’s really that “give value first” type of thing. I think if you focus on what you do best… And the typical business of raising money is really “Me, me, me, me, me! Hurray for me! I wanna make a lot of money”, or something like that, whereas if you notice, the people that really are good at raising capital have a bigger purpose a lot of times in themselves.

Even when we were doing the mobile home park thing, they were actually building a Christian academy and they were funding it from the proceeds of the parks. So they had a purpose that was bigger than them. You’ll see that today with some businesses, startups where they’ll be digging wells in third world countries. Actually, my assistant’s doing that – she’s going to Nepal this summer. It’s part of the business model, and the charity is built into it. That’s always a cool thing, if you can do that right at the outset.

I think sometimes there’s some good ways to do things to raise money, because it’s much easier to raise money for charity, for example, than to raise money for Dave or Joe. But it’s really about giving value first and helping others, and I think with all the different experience I’ve had, it’s easy for me to do that. It’s really through this content creation and experience that I share with others, and I think people get to know you and it builds trust and confidence. People start to become more comfortable, they become more confident.

Joe Fairless: Okay. I’m taking notes, and I’m hearing that, and I also want to dig in a little bit deeper, because I would love to know… People are investing in delinquent upside down mortgages that are in bankruptcy… So I hear you that you’re adding value first, you’re creating content, you’re educating people, you’re building the relationship; the bigger purpose – I understand how that can be positioned and hold true, where you’re helping people work out their mortgage so they stay in. You don’t wanna repossess it, so you’re doing what you can there – so you do have an altruistic angle that you can talk about. That being said, delinquent upside down mortgages in bankruptcy – how do you position those conversations specifically when you’re talking to people?

Dave Van Horn: Well, obviously you have to do a little bit of education, because people are only gonna invest in what they know. In the beginning, we would relate notes to real estate, and most [unintelligible 00:16:07.03] an investor, and we have three types of investors. We have an investor who would invest in a note, and then we have people that invest in a fund, and then we have people that need more information, and you provide free or low-cost information. It’s really to get them to understand the investment.

In the beginning it’s kind of simple because everybody’s in the note business already, they just don’t know it. You have a credit card, you have a student loan, you have auto debt, you have medical debt, you have mortgages… The country is just loaded to the gills with debt, but people don’t think about receiving a check, they just think about writing checks every month. I’m talking in general… I’m sure the Best Ever listeners are a lot more savvy, you get the idea.

Joe Fairless: I get it, yeah.

Dave Van Horn: So it’s really about “How do I come across the aisle and start to think like the bank, or becoming the bank?”, and what are the advantages of that. And one of the things that intrigued me from the investment side was if I could buy something at a discount with a high yield that’s backed by a piece of real estate, “Hey, that’s pretty intriguing.” And by the way, it fits one of Maslow’s hierarchy of needs, because everybody needs a place to live, right? So there’s more to it than just equity, for example.

There’s things like emotional equity, for example. With a junior lien, why would somebody stay if their house was upside down, and the reason is because they need a place to live. It doesn’t have to make sense, other than what do they pay monthly and what would it cost me to move from here. Or there’s emotional equity – “I raise my kids there, I finish the basement, I know the neighbors, what will my family think, it would cost me more to move into another place with first month/last month security, pay for a mover… Or do I just figure something out on my junior lien and stay here?” So there’s all that going on.

I always describe emotional equity as “Joe Fairless at his mid-life crisis, buying a red convertible. He drives it off the lot, it drops ten or twenty grand in value, but he looks cool… The girls like it, so he buys it.” Now, does it make sense financially? Hell no! [laughs] That’s emotional equity, right? When you apply that to a house, it’s even more powerful.

Joe Fairless: The number one thing – for a lack of a better word, because I can’t think of a better, bigger word than that – that investors want to make sure of in their investment is they don’t wanna lose money. Studies after studies prove that out, that if you ask someone or do an experiment with someone and you either take 50 cents from them or give them 50 cents, they’re much more pissed off if you take it, than they are happy if you give them 50 cents. And if you give them 75 cents but take 50 cents, they’re still pissed off about the 50 cents. How do you address that with your business model? Because that has to be a question that comes up continuously, or at least the thought process of “I don’t know if I wanna invest in upside down mortgages that are in bankruptcy…”

Dave Van Horn: Well, first of all they’re not all upside down, and they don’t always stay upside down. There are assets that are covered with equity, like first mortgages, and then there’s assets that are partial equity, and then obviously there are some assets that are no equity, but they’re priced accordingly and they have different yields. And then there’s different ways to spread the risk.

One of things you mention is how do you sell an asset that’s partial equity or upside down, and what we found was we listened to the buyers and they were concerned, too. Part of it is track record, and part of it – we actually have a warranty on our performing notes. The warranty puts some people at ease. Now, the warranty is only as good as the company, because if the company goes out of business, then the warranty would be very valid, right?

The other side is some people will go “You know what? I have a portfolio of 20 notes, and 15 or 18 of them all have equity (I feel good about that), but here’s a note with partial equity. It’s a lot cheaper, it has a lot higher yield – maybe I’ll take a flier and invest that. Or I’ll invest 10% of my portfolio in this crazier asset class with more yield.”

Then other things happen too, like for example phantom appreciation. If you had a note that was partially covered by equity, and the market comes back. Maybe it’s a note in Phoenix, or Florida, or whatever, and the real estate market comes back, and now all of a sudden that note I got a great price on, the equity comes back and the property behind that note, and all of a sudden the note’s worth more, and I didn’t really do anything, the market did that. And I was collecting payments all along, and I could sell my note for the same or more than what I bought it, and I might have been collecting on it for three or four years. That’s a neat phenomenon, too.

Joe Fairless: If I buy a note that is upside down, what’s the warranty cover me for?

Dave Van Horn: Our warranty was investment principle minus payments received, and still is, when you buy a performing note. It could be first or second mortgage.

Joe Fairless: When you buy a performing note…

Dave Van Horn: Yes. Now, if you buy a non-performing note, we only warranty the lien position and that it’s a valid lien, and it’s in the lien position as advertised.

Joe Fairless: Okay, got it. So if you buy a non-performing, then it’s…

Dave Van Horn: You’re a more savvy person, usually you should know what you’re doing. It’s a little more dangerous game.

Joe Fairless: Okay, that makes sense. What else, if anything, should we talk about as it relates to raising capital?

Dave Van Horn: I guess it’s really about focusing on your strengths, getting to know your true self, what you’re good at – for me it was raising capital. I think a lot of it is how you do it. When I think about my best ever deal – on the raising capital side it has been where people have invested a couple million dollars or something, and I haven’t really met them yet. That’s just a testament to the systems and processes you have in place as far as your web presence, your profiles, your content creation that you do, the stories that you tell, the experience that you show… Because you know how it might take several touches for someone to feel comfortable, to move forward with an investment; it makes sense, right? But if you can become more efficient at that, maybe…

It’s sort of like a podcast is – a podcast is more efficient than me flying on a plane to a hotel in Ohio, so I can reach more people, potentially. So it’s kind of like that… It’s “What can I do more efficiently to provide information, comfort, advice, everything from paperwork — it’s really the systems and the process of facilitating investors, giving them the information they need in a more efficient way, maybe that’s what I’m saying.

It’s really not a salesy type thing, it’s finding ways for them to get to know you better, sooner. It’s kind of interesting when some people invest with us…

Now, the other thing is we do provide outlets to connect with them, though. We do make ourselves available, whether that’s Q&A conference calls, or actually have events for our ideal customers, so to speak. I run a group called Strategic Investor Alliance, and that group is really a venue for high net worth investors to meet with me and people that I know, and also to look at other investment vehicles and other experts. It’s like a group that I put together — it’s different than what I used to do with that real estate group years ago. I used to facilitate and network with all these real estate investors.

Today, it’s a little higher level group, but very similar in the concept of we just share resources, and we vet investments, and I bring in other investment vehicles, other funds. Some people look at me kind of strange and they go “Well, why would you do that? Why would you bring other investment vehicles? Aren’t you raising money?” and the answer is “Yeah, but my investors – and myself; I’m an investor – like to look at a lot of investment, and I like to vet them”, and we all have different strategies. Our group acts like a Yelp for various funds, investments and other types of alternative investments that we all like.

Then we bring in experts, too: lawyers, accountants, asset protection, legacy planning and all that stuff. We do all these things that we have in common, and I think that by sharing that type of value, that shared values approach – I don’t know if I raise more money from that, but I think people see the value in it. We don’t sell anything at this group, for example; it’s just information and shared resources.

I think a lot of investors like that because they can validate their investment strategy, they can help to build a solid portfolio of investments, and they can see what other investors like them are doing. I think it’s a unique way to do it.

Joe Fairless: Dave, where can the best ever listeners learn more about you and get in touch with you?

Dave Van Horn: Probably the best way is through my site at pprnoteco.com. Anybody can reach out to me direct at biggerpockets.com/users/davevanhorn.

Joe Fairless: Dave, thank you for being on the show, talking to us about the lessons that you apply to raising money in a perceived difficult area of raising money (that’s for sure)… How you help people first, through education, content creation… I love this money quote: “Find ways to get them to get to know you better, sooner.” I think that’s really the epitome of — well, adding value… I think there should probably be an added value part in there too, in that quote. What you’ve talked about before, that’s great stuff.

Also, identifying your core audience – as you said, you have three: an investor who will invest in a note, an investor who will invest in a fund, or an investor who needs more information, and seeing where they are in the marketing funnel, and then giving them what they’re looking for.

Lots of great stuff… If you’re raising money for delinquent upside down mortgages in bankruptcy, then you can raise money for anything, and that’s why I’m grateful that we had our conversation, to share that with other Best Ever listeners who are raising money as well.

Thanks so much for being on the show. I hope you have a best ever day, and we’ll talk to you soon.

Dave Van Horn: Thanks, Joe. Take care!

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Best Ever Show Real Estate Advice from experts

JF823: How to Delegate Everything and Become a Nomad While Running Your Business #SituationSaturday

Have you ever wanted to live outside the country while still running your business? Seems impossible doesn’t it? It’s not, it’s a matter of selecting the right team to hire, setting an expectation, and preparing yourself in the business accordingly. Hear how our guest had closed her biggest deal while living in Thailand.

Best Ever Tweet:

[spp-tweet tweet=”Don’t just pack up and go somewhere, be sure you are prepared financially and you have a replacement.”]

Micki McNie Real Estate Background:

– Owner, Broker, Investor at 33 Zen Lane, a Denver real estate team that focuses on “investment-minded” clients
– A commercial leasing broker and a residential broker
– Owns rental properties, hold notes, and flip houses
– Based in Denver, Colorado
– Say hi to her at www.33zenlane.com

Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple.

Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes.

Download your free copy at http://www.fundthatflip.com/bestever


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Best Ever Show Real Estate Advice from experts

JF790: Why You Would Buy an $86 MM Note Portfolio and the 5-3-2 Method

Buying notes can be scary if you don’t know what you’re looking for, especially when you know you are buying a package with some mobile homes in it without land. You’re about to hear from our guest who purchased an $86 million note portfolio for pennies on the dollar and made a great return, you also hear about his 5-3-2 method of selling.

Best Ever Tweet:

[spp-tweet tweet=”You can still be resourceful with mediocre products.”]

Troy Fullwood Real Estate Background:

– Owner of Pinnacle Investments, A note buying company for over 20 years
– Author of 25 articles on real estate investing, covering issues on note buying
– Has been involved in over 13,000 secondary mortgage transactions
– Real estate investor in 1996
– Based in Chandler, Arizona
– Say hi to him at www.pinnacle-investments.com
– Best Ever Book: The Alchemist by Paulo Coelho

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Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Go to http://www.adwordsnerds.com strategy to schedule the appointment.

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Best Ever Show Real Estate Advice from experts

JF768: What You CAN and CAN’T Do with Self Directed IRA’s #skillsetSunday

You’ve wondered what you could and couldn’t do, now you will know! Cure all your doubts about this this peculiar little entity and hear why you should have one. You can’t miss this one!

Best Ever Tweet:

[spp-tweet tweet=”Remember that there is always a better way to move money.”]

Kaaren Hall Real Estate Background:

– President, uDirect IRA Services, LLC
– Helped thousands of Americans invest their IRA into real estate, land, private notes & more
– Educating individual investors and professionals is the cornerstone of uDirect IRA
– Based in Orange County, California
– Say hi to her at www.udirectira.com

Want an inbox full of online leads?

Get a FREE strategy session with Dan Barrett who is the only certified Google partner that exclusively works with real estate investors like us.

Go to http://www.adwordsnerds.com strategy to schedule the appointment.

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JF572: How to Read a Tape of Notes to Buy #skillsetsunday

Ever wondered how investors purchased NPN’s (non performing notes)? Our Best Ever guests pull thousands of properties from banks and creditors in the form of an excel spreadsheet. They look at key indicators such as Senior Lien Balance, AVM, and Unpaid Principle Balance. This is a comprehensive show, and you will learn how to determine a note purchase!

Best Ever Tweet:

[spp-tweet tweet=”We find credit scores to be ridiculously irrelevant.”]

Cathie Jeffs & Cathy Cray real estate background:

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. 

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

Are you committed to transforming your life through Real Estate this year? If so, then go to http://www.CoachWithTrevor.Com and claim your FREE Coaching Session.  Trevor is my personal real estate coach and I’ve been working with him for years. Spots are limited, so be sure to do it now before all the spots are gone.

Subscribe to Joe’s YouTube Channel here to learn multifamily and raising money tips:https://www.youtube.com/channel/UCwTzctSEMu4L0tKN2b_esfg

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JF492: Take NOTES…Then Sell Them!

Please Take 4 Min and Rate and Review the Best Ever Show in iTunes. .

You may be tired of tenants and toilets…but never paper. That’s right, paper that makes you cash. Our Best Ever guest is a note buyer with extensive experience is all things real estate. Hear how he is able to acquire steep discounts with high equity!

Best Ever Tweet:

[spp-tweet “The higher the value of the property the more risk you have”][spp-tweet “”]

Bob Malecki Real Estate Background:

  • Real estate investor located in Kingston, Washington which is 30 miles north of Seattle
  • Experienced in the analysis, acquisition, repositioning, and disposition of distressed properties
  • Established power teams in key markets to facilitate the repositioning of those properties
  • Say hi to him at rcm.company
  • His Best Ever book is Three Simple Steps by Trevor Blake

Listen to all episodes and get a FREE crash course on real estate investing at:http://www.joefairless.com

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Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

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Best Ever Show Real Estate Advice

JF426: How Investing in Multiple Markets is Possible!

Our Best Ever guest has seen over $100,000 on some flips, but has kept a laser focus on note investing. He started as a landscape contractor and evolved into an investor in several different markets including Ohio, Indiana, Maine, and now currently resides and invests in Phoenix. He has a seasoned background so be sure to absorb some wisdom!

Best Ever Tweet:

[spp-tweet “Everything’s a people business no matter what you do.”]

Dave Franecki’s real estate background:

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Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

What’s the Best Ever health plan for YOU?

Go to http://www.stridehealth.com/bestever and find a better health plan in 10 minutes or less. On average you’ll save $418 on coverage and care.

Best Ever Show Real Estate Advice

JF406: Noteworthy Tips from Two Millionaire Note Buyers

Tired of tenants and toilets? Well what if you were to earn the same cash flow every month and not lift a finger? Buy notes! That doesn’t mean it’s an effortless investment…no way! You may find yourself with non-performing or distressed notes that include higher risk, if you have a fraction of the experience and know-how of our Best Ever guests you can mitigate most of these risks…hint, invest in higher equity NPN’s!

Best Ever Tweet:

[spp-tweet “Know what you’re buying.”]


Cathie Jeffs & Cathy Cray’s real estate background:

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Made Possible Because of Our Best Ever Sponsors:

You find the deals. We’ll fund them. Yes, it’s that simple. Fund That Flip is an online lender that provides fast and affordable capital to real estate investors. We make funding your projects easy so you can focus on what you do best…rehabilitating homes. Learn more at http://www.fundthatflip.com/bestever.

Best Ever Show Real Estate Advice

JF380: How to Raise Capital, Buy Cheap Notes, and Fund Start-Ups

Today’s Best Ever guest set out to raise money to fund…well, just about everything! From business start-ups to breakthrough inventions, he has been the key to business execution. Our Best Ever guest is a big player in the note buying game; he’s able to acquire a note package for UNDER half price…he’s also going to share 12 ways to profit from note deals…you MUST see his article here: http://ezinearticles.com/?12-Ways-To-Profit-From-Non-Performing-Real-Estate-Notes&id=9153373




Best Ever Tweet:




[spp-tweet “Know what you’re buying before you buy it. “]




Christopher Winkler’s real estate background:


  • Manager of Silverwood Capital, LLC, a real estate investment firm specializing  in discounted residential distressed and toxic assets

  • He has over 30 years in raising venture capital, sales, marketing debt mediation and collection practices

  • He has helped raise over $20 million in private equity for early stage companies

  • Based in Costa Mesa, California

  • Say hi to him at http://www.silverwoodllc.com 



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JF373: How She Bought a Condo UNEMPLOYED!

Cash flow is KING! Our Best Ever guest is creative, which is why she was able to make the cash FLOW from start to finish in a hot market! She shares her Mid-West flips, locally owned acquisitions, and her most exciting project that will transform an old retail building into a unique space you wouldn’t have expected…tune in!

Best Ever Tweet:

[spp-tweet “You can find something in almost every neighborhood that can cash flow if you buy it right.”]

Micki McNie’s real estate background:


  • Real estate investor who focuses on buy and holds, rehabs, and note buying
  • Started career as a tenant rep for commercial leases then moved to help clients buy and sell residential properties
  • Based out of Denver, Colorado
  • 33 Zen Lane
  • Say hi to her at www.33zenlane.com


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Made Possible Because of Our Best Ever Sponsors:

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Best Ever Show Real Estate Advice

JF352: Why to Buy a Non-Performing Note Instead of Buying the Property

Today’s best ever guest is the note expert. He has had tremendous success buying non-performing notes, and explains to us exactly what it is he does and why YOU should buy a note instead of buying the property itself.

Best Ever Tweet:

[spp-tweet “We can’t do it for him, but we can clearly guide him and show him what the process looks like.”]

Eddie Speed’s real estate background:

–           Based in Argyle, Texas and is the founder of NoteSchool

–           President of Colonial Funding Group and principal in a family office fund

–           Since 1980 Eddie has been focused  on strategies that positively impact the way the seller financing and non-performing note industry operates today

–           Closed on over 40,000 transactions

–           Say hi to him at http://www.freemeltdownbook.com

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Made Possible Because of Our Best Ever Sponsor:

Patch of Land – Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at http://www.PatchOfLand.com

Best Ever Show Real Estate Advice

JF265: EVERYTHING You Need to Know About Buying Notes

Get out your pen and paper to start taking notes on…NOTES. Today’s Best Ever guest shares with us everything you need to know about buying non-performing notes and once again, just how important doing YOUR due diligence is.

Best Ever Tweet:

[spp-tweet “You want to spend your time working on your business, not in your business.”]

Paul Birkett’s real estate background:

–          Founder of Automation Finance and is based in NYC, NY

–          It generates growth by returning non-performing assets to performing status

–          Buys pools of non-performing residential mortgages and works with the borrower to address the cause of their distress

–          Was in the Guinness Book of World Records for building and mailing the largest greeting card in the world

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Made Possible Because of Our Best Ever Sponsor:

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Best Ever Show Real Estate Advice

JF207: The THREE Keys to Profitable Note Buying

Note buying, baby. Today’s Best Ever guest shares with you the THREE keys to successful note buying. PLUS, he gives tons of great tips for marketing your real estate biz.

Best Ever Tweet:

[spp-tweet “Get clear on what you’re building towards then work backwards.”]

Bryan Ellis’s real estate background:

–        Has over 10 years of experience as a real estate and mortgage investor based in Atlanta, Georgia

–        Host of Self-Directed Investor Radio and publisher of Bryan Ellis Investing Letter which has over 700,000 subscribers

–        Listen to his show at http://sdiradio.com/

–        Loves hanging out in Las Vegas more than anything even though he isn’t a gambler

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Sponsored by Patch of Land – Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at http://www.PatchOfLand.com

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JF178: TWO Ways to Structure an Agreement with Local Team Members

Want to invest in a market outside of where you live? Want to learn how to structure partnership agreements with local team members? Today’s Best Ever guest shares with you TWO ways

Best Ever Tweet:

[spp-tweet “You can’t steal second base with a foot on first base.”]

Anthony Dadlani’s real estate background:

–        President of A Plus World Group based in New York City, New York

–        15 years as an equity markets trader and portfolio manager

–        Experience buying and selling private liens, notes and mortgages

–        Actively buying single family homes

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Sponsored by Patch of Land – Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at http://www.PatchOfLand.com

Best Ever Show Real Estate Advice

JF168: The Best Ever Bandit Sign Strategy

You putting up bandit signs? Then listen up because today’s Best Ever guest shares with you a bandit sign strategy that is incredibly effective. Plus, he talks about how to build your business from the CEO seat.

Best Ever Tweet:

[spp-tweet “Be a specialist.”]

JP Moses’s real estate background:

–        Real estate investor who is based in Memphis, Tennessee

–        Strictly a wholesale operation – only does wholesale deals

o   Done note buying, wholesaling, flipping, and property management

–        Done more than 250 deals and been a real estate investor for over 15 years

–        Started the REIA group in Memphis and now has over 600 members

–        Say hi to him at http://www.reitips.com

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Sponsored by Patch of Land – Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at http://www.PatchOfLand.com

Best Ever Show Real Estate Advice

JF162: Insider Scoop on Blind Pool Funds AND What You Don’t Know About Note Buying

Today’s Best Ever guest shares how blind pool funds work and gives you info on next level financing advice based on his extensive experience in the real estate finance industry.

Best Ever Tweet:

[spp-tweet “Out of clutter find simplicity.”]

Dion DePaoli’s real estate background:

–        CEO at Secure Debt Exchange Systems based in Miami, Florida

–        Direct experience with real estate and mortgage investment fund management, asset management and disposition

–        Over 15 years in real estate finance and you can say hi to him at http://www.sdxs.us/

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Sponsored by Patch of Land – Could you do more deals if you had more money? Let the crowdfunding platform, Patch of Land, find investors for you and fund your next deal…and your next deal…and your next deal…and…well, just go find out more at http://www.PatchOfLand.com

Best Ever Show Real Estate Advice

JF130: Top Note Buying Tip Revealed

Ever wonder what people are talking about when they say they are note buyers? Well, today’s Best Ever guest clears it all up and shares how and why he went from time shares to note buying.  And…he shares with you his #1 tip on note buying.

Tweetable quote:

[spp-tweet “Believe in yourself and start today!”]

Steven Soto’s real estate background:

–        Founder and principal of Higher Trust Investments based in Orlando, Florida

–        Identifies distressed real estate assets for high net worth clients  with a focus on tax deeds and non-performing notes nationwide

–        Say hi to him at http://www.highertrustinvestments.com/

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Best Ever Show Real Estate Advice

JF63: Revealing Five Profitable Exit Strategies for Note Buying  

Note buying. Buying notes. And more note buying…you want to hear from a note buying expert? Listen to today’s Best Ever guest as he shares how to do the due diligence on note buying and the reveals five exit strategies for note buying.

Tweetable quote:

 [spp-tweet “A discounted note today saves the bank money tomorrow.”]

Val Sotir’s real estate background:

–        Founder of Watermark Capital Partners (http://www.watermarkcapitalfund.com/)

–        In 2009 he was featured on the cover of Forbes magazine as one of the mortgage survivors on Wall Street

–        10 years of experience as a stock broker

Subscribe in iTunes and Stitcher so you don’t miss an episode!

 Sponsored by: Door Devil – visit  http://www.doordevil.com  and enter “bestever” to get an exclusive 20% discount on your purchase.

Best Ever Show Real Estate Advice

JF39: Pssst…Check Out This Note

Welcome to the wonderful world of note buying. Where you become the proud owner of paper not property. So basically you are now a bank. Want to hear how the heck one of the most successful note buyers is approaching this investing strategy?

[spp-tweet “Everybody is in the note business. They just tend to be on the wrong end of it.”]

Dave Van Horn’s real estate background:

–        President of PPR Note Company based in Philadelphia, PA

–        Owns 18 investment properties

–        Licensed real estate agent for over 25 years

–        Visit him at http://www.pprnoteco.com/

Subscribe in iTunes and Stitcher so you don’t miss an episode!


Sponsored by: Door Devil – visit http://www.doordevil.comand enter “bestever” to get an exclusive 20% discount on your purchase.