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Yes, hi, I'm and welcome to another, a Webinar. I'm with note investing made easier. I am your, your guests and I'm your host. Rather Martin signs in nasty made easier. I and uh, today we have a very special guest, Chris Seveney and um, before uh, you know, getting started with, um, with getting into discussion with Chris and I'm really looking forward to the topic today on note investing. I like to just make a few announcements.
We do have the distressed mortgage expo with our friends, um, Matt, uh, Matt Allen and mark gold coming up next month as well as a note expo, which I'm very excited about going to a in November the first time I'm going to be going there. So I really look forward to meeting, um, you know, all of eddie speeds, crew and, and just, you know, seeing Tracy Murray and, and uh, you know, the whole gang.
So, um, I have a sign up, they gave me a signup link for early discounted sign up. Um, you know, registration if you have a chance. So Chris, welcome to the program Sir. Hey Martin. Thanks. So I'm giving, you know Chris. Note investing
Note Investing
Yes, hi, I'm and welcome to another, a Webinar. I'm with note investing made easier. I am your, your guests and I'm your host. Rather Martin signs in nasty made easier. I and uh, today we have a very special guest, Chris Seveney and um, before uh, you know, getting started with, um, with getting into discussion with Chris and I'm really looking forward to the topic today on note investing. I like to just make a few announcements.
We do have the distressed mortgage expo with our friends, um, Matt, uh, Matt Allen and mark gold coming up next month as well as a note expo, which I'm very excited about going to a in November the first time I'm going to be going there. So I really look forward to meeting, um, you know, all of eddie speeds, crew and, and just, you know, seeing Tracy Murray and, and uh, you know, the whole gang. So, um, I have a sign up, they gave me a signup link for early discounted sign up. Um, you know, registration if you have a chance. So Chris, welcome to the program Sir. Hey Martin. Thanks. So I'm giving, you know Chris. Note investingo
Note Investing
Speaker 1: Yeah.
Speaker 2: So Chris, I'm sorry, we're just having, I just had a technical difficulty here. Chris, so you with us Yes, I'm still. Okay, great. Okay. So, so, um, Chris, you, you've been um, you know, I've seen you on the scene past few years and um, you know, I have a, what, what caught my eye with you is, um, is over over the few years I've seen you, you know, kind of grow in your expertise in the note space. Um, I know you have a family at home and you also have a full time career that is probably all very demanding, but yet, you know, you, you rolled up, you roll up your sleeves and, and you, you're, you've committed to this industry and you know, for that, I commend you. Thank you very much. It hasn't been easy,
Note Investing made easier
Speaker 3: uh, spent a lot of challenges and especially on the learning curve when you start, you know, start out because you take two steps forward, you know, take at least one step back and sometimes you take three steps back. But over time it's continued to fall for like people say and you work hard and really set up systems, which I know you talked about a lot is setting up systems and automation. Once you get to a certain level where you get comfortable with that, it really takes the amount of time that you're spending and does reduce it down because we've got a lot of them, note investing
Martin Saenz
Speaker 2: well, you know, on the subject of um, you know, challenges because there's a lot of people that are, that are at the starting point. So they have the family, they have the full time job, you know, they're, they're, they're thinking about notes. So tell us about some of those challenges they can expect.
Speaker 3: So the biggest challenge in note investing is really getting the right team in place and getting your system set up. And he really isn't as difficult because everyone shares a lot of information in initially regard therapy, whether it's attorneys or bpo companies, insurance companies.
DataTree and Systems
So it does get shared, but really setting up your systems because people have strengths and weaknesses and people are stronger in certain aspects than others. So you can't just pick a system from somebody else's coffee, you know, I couldn't take your system and you can just copy it and put it over to Mike. I'll give my system over somebody else very similar to, you know, I'll say the holy grail of note investing is you're calculating, you know, people typically don't share their calculator just because people have different thoughts on it.
Processes and understandings. And some people have a simplistic one, some people may have a conflict. So know my biggest struggles. We're really trying to figure out the right systems to use and get up to speed on. And uh, once I started working down that road and what I've ended up finding as you grow a lot of those systems that were free starting out, you have to shy away from start spending some money to make money and you start using the systems that do have a price tag them.
Sound Advice Note Investing
Speaker 2: Yeah. No, that's great. That's great. Sound advice now, now there is, um, there is one, one point I would, I would beg to differ and that is alleys on this webinar here. So she, she could take your systems, refine it and give it back to you in the, in a better state. So there are people that have that capability shout out. So you went through, um, you know, you, you kind of, uh, a few years ago you, I'm committed, I know you did Scott Carson's training program and um, you know, you went through and that's a big commitment to go into a training program because that pretty much mentally you're, you're saying I'm here, this is, this is where I'm going to go with things. Note Investing
Speaker 3: Yup. And part of the things I mentioned about training programs, I know you have a training program. People have another training program, provides a solid foundation to a lot of things, but there's still about education and learning that continues on and somebody made a comment about it's like playing golf. You can watch videos on trying to hit a golf ball on the tee and you know, buy a note, flash at the ball. It's a different world. Note Investing
Expectations
And I just want people to shut the expectation that, you know, it's not all of. In fact, when you take a training that you're going to pull out five, 10 notes, you know, pull them down, you may, and that's great, but just to let people know, kind of my history is I started a little over two, almost two and a half days later on May have a 60 and I started doing research and I spent a month or two and just watching videos on things than I did.
Speaker 3: Take some of Scotch stream that he had and I didn't find my tourists note till November. So it took six months before I bought a note. I bought four at that point in time. Um, work film, work mouth, had a death in the family, so it kind of put a pause. And then once I started taking some more advanced training, that's when I just started buying three, five, seven notes a month.
Years from now
And I've been doing that now for a year and working full time. I'm not looking to, at this point in time, pull down 100. I'm like easily, certainly pulled down. Congratulations. Um, or uh, you know, trying to be 20 or 30. I said it, you know, my, my level of knowing what I can commit to and what I can get done. So by doing that, it's, you know, you still scale over the course of the year. My point was by 66 notes and this year, um, you know, with the halfway point I was at right around 25.
Speaker 2: Yeah, no, no, that's really good what you're saying. And I'm just for just for um, you know, uh, clarity sake, uh, in my buyers group that, that, uh, part of, part of my training program, you know, we took down the opportunity recently. Um, but what, what I'm going to say is though, is, um, I really, I really feel like you did it correctly. You did a textbook in that, in that you waited the six months to go and look at the systems in place, would it with Scott's training or what have. Note investing impact investor
Note Investing
And then whatever else you were able to pull together and then you and then you, you just mapped everything out under, absorbed it, understood it. And then you went out and bought six months later, I think it's the kiss of death when you just get into this business and then you just buy haphazardly, you know, out of the gate and then not knowing really what you have and, and you know, some folks play it that way as well.
Speaker 3: Yeah, I would agree. And even after six months that I, looking back on it and did I know what I was doing, I look back now and say, God, what did I do But, you know, fortunately, or use my own money. And I actually that out, I bought a note bankruptcy bought nonperforming bought a performing and one that was on a loan. So I actually wanted to hit the gamut and you'd see all aspects of different types of exit scenarios. And
I tell you, I was real conservative notes because the property is all had equity. The upb on them between 10 and $20,000 on the property. And that was the other thing. I looked at a very low risk because on each one each acquisition was under 10 grand. But if something were to go wrong, um, I couldn't see a major loss on any of these assets and sometimes I see people who are getting new business trying to take down a $200,000, $100,000. And that's, for me personally, I wouldn't feel comfortable doing that because there's a lot of things that you just don't know what you don't know.
Note Investing
Speaker 2: Yeah, no, that's a good point. It's, um, it's interesting in um, you know, in the real estate world, you can, you can start out buying a low dollar property which, you know, a c or d class property and it can give you a lot of headache and um, but it could be a good starter opportunity for you, but in the note space, um, you could buy a, you know, a, a good decent note for $10,000 us on the second side in a very nice property in a b or an a class property. So, um, you're not, you're not having those headaches of the c and d class property as you're doing the workouts.
Speaker 3: Yeah. Very good point because you see a lot of people who have limited amount of money you can get into real estate investing and they don't know where to go and now honestly notes isn't something that is hopefully advertise a lot and my fulltime job was in real estate and it took me 20 years before I even knew you could buy a note and I went down that typical course of others, you know, I know I built my single family home. Then after that my wife and I picked up a few rentals using the strategy from bigger pockets. Now after we'd done those, like, okay, this, so forth, you've got soccer on the weekends until four. You just can't scale.
Note Investing
Speaker 2: I, I, you can't scale it. I, I've read both of Brandon's books and I enjoy, I enjoy his personality and I enjoy a lot about him. But um, I don't believe, I don't believe in the strategy as the way to success. I don't know, it's just, it's too, it's too slow of a bill then. Um, and I think, I think you're just kind of picking up headaches along the way.
Speaker 3: Now. You are, I mean, again, mine were able to basically refinance out, so I've got no money in the box, one of them's silver spring now and more local to the area, but you know, I remember one Sunday morning I get a phone call, I'm drained clauses, well my candidate put baby potatoes down the drain. So what do you expect is going to happen So to plumbers waiter with a heavy duty alluded to come and get it out. But I mean I spent three hours on Sunday basically chasing down somebody to get out there and benefit. I think with the notes spaces, you don't have to do that. You have very solid subcontractors or consultants. Second use white collar individuals typically that you dealing with that are very professional and they're much easier to manage. Note investing impact investor
Note Investing
Speaker 2: Yeah. Yeah. And to the bad renters, my family would make bad renters because my, my three year old's shoved a whole roll of toilet paper in the toilet. We had to call the uh, the other day and we had to call the plumber. So, but yeah, I can only imagine. I, I've had plastic straws and cups and dishwashers I've had to fish out and um, you know, all, all the headaches of have a landlord that you go through. So, so, um, you have, you ever a professional job, you have a few properties and you're building a note portfolio for yourself, what's the end game
Speaker 3: So the, I'd say continue to build, continue to build wealth now eventually part of the goal would probably be to step aside from full time Gig. It's not something I'm looking for in the near future by any means because I love what I do for the full time Gig and uh, if I can continue to grow my business by three to five notes per month from that standpoint. So I'm looking at it for more probably five to seven years where I put my target APP. Note investing impact investor
Note Investing
If I could move that forward I could. But right now I'm in my early, mid forties and so forth with kids that are going to be going to college and so forth. So the extra income from notes and so forth really is all just going to call them and things like that at this point in time. So that's kind of longterm goals. Eventually looking to some point in time that you look into starting a fund to raise some capital five 60 with credit investors as well. Um, just to really try and get more buying power because that's the one thing I think everyone struggles with buying pain. Whereas if you can take down the larger pool, you definitely probably can get better pricing on it from that perspective.
Speaker 2: We're kind of an open book here on the Webinar. I would consider the fund sooner than later. I'm just working with accredited investors. I think you're getting a whole different other type of person, you know, connect with a good scc attorney to make sure you're setting it up correctly. And, and, um, I think that will pay you dividends and I think that that will accelerate your growth to just, just my two cents.
Speaker 3: Yup. Now, one thing that I appreciate that appreciate the advice and upon one of the things about taking information from others, whether it's good information, a criticism, and just making yourself be teachable. Whoever's watching this and the one thing that I say about the notes, most people are here to help you and help you learn so you know, you post something. Somebody may make a comment or a criticism usually that person out to protect. Note investing impact investor
Note Investing
Now I had somebody recently, I'm just sending you an email that they weren't happy with that they made because they were essentially put a deal up to had an exit strategy will be performed. Notes that they had a very low interest rate at a very high percentage and you know, a lot of people will talk, oh well you can sell for 80, ninety cents on the dollar, so that's average. But you have to really play into what are you selling that to get an investor in terms.
If somebody is looking to get a 10 or 12 percent return three percent, now that's going to be heavily discounted. Note, you're not going to get 90 percent. So kind of explain that to somebody and you know, I think they just took it the wrong way where I was really just trying to help them and they thought I was trying to kill their deal, which now I wasn't just trying to point out certain things and help people.
Speaker 2: You have people that take things difficult out of the gate like that, you know, they're not, they'll, they'll need some type of adjustment when, you know, at some point, because uh, you know, this industry, you have to be, you know, you have to be respectful, likable, and um, you know, striving to improve yourself for people really to connect with you and start looking to help you. I'm not saying you have to be seasoned whatsoever. Just just be someone that you know, that, that comes across with humility.
Note Investing
Speaker 3: Yeah, no, absolutely. Also, you know, you don't know something, you don't know it and that's one of the things that you're going to admit and then pick up the phone and ask somebody. There's so many people in business as well, more experienced than myself and others that you reach. And that's what's great about technology nowadays, facebook groups and so forth is you can post a question on the group.
Speaker 2: So I'm jumping into the contract for deeds. What made you go that route
Speaker 3: So started out the notes for the first 2000 assets I bought. Well first position notes. I never really delved into the second third to do a little more research. And I did essentially the same thing I did with notes as I get a contract with these, uh, I went and I pulled down a three contracts with dean towards Thanksgiving of last year. And when I did that, really just worked through the process and you know, learned a lot, actually had one under agreement previously,
Note Investing
but I was overthinking the process and ended up not having to deal with, but ended up in big educational experience and know from standpoint of recently over the past six, eight months, the availability of contract to be much greater than notes. Uh, and also from a pricing perspective, the pricing has made fairly consistently had appreciated as much as notepad were notes that I was picking up for 35, forty five cents on the dollar for now, sixty cents on the dollar.
You're seeing that now with contracts contract picking up, you know, five months ago for 35, forty cents on the dollar now 60, seventy cents on the dollar, like anything, a lot of people walk to that space so it's bumped up the pricing. But it was really availability was what drove me into the space, but I followed the same exact process of being very strict and stringent on making sure that I started out with. Note investing impact investor
Note Investing
Speaker 2: That's real respectable to say, you know, you're going away from where the hurt is. So that's, you know, that's always kind of my thought on something is go wherever, wherever someone is at, you know, just go, go the opposite direction. So, um, what's the average fair market value of the property that you're looking at
Speaker 3: Oh, the value right now is between 40 and 60,000. So I've got right now essentially about 25 portfolio right now and total market value of those. About one point two.
Speaker 2: Okay. Okay, good. Good. That's, that's, that's a nice build over that period of time. So fair market value, 40 to 50 k. what's, what areas of the country are you seeing a lot of inventory with Note investing impact investor
Speaker 3: So right now in the Midwest and Ohio and Michigan, Indiana and North Carolina, southern states, Alabama, all Csun as well as fuel in Virginia, which I bought a few in Virginia as well, but typically most of mine are in between North Carolina, Indiana and Michigan is the primary states that I connected with an invested in because I've pulled again my notes side of my teams and those areas.
Note Investing
Speaker 2: And when you get a property 40 to 50. Okay. What um, what and what's interesting about 40 and 50 Kay properties in that midwest or you know, Michigan along the rust belt is that it's a rust belt. So whether it's horrendous. So you know that there's a constant need for new roofs, new windows and everything else. So that probably, you know, compounds expenses for, for people living, but what's, um, what's the typical job of someone at the who has the house of like a 40 slash 50 k house,
Speaker 3: uh, nurses, school teachers, a lot of civil servants, a, I've seen a lot in that area and
Speaker 3: uh, I've got people who work in autobody shops and people used to work in the auto industry. So it's, it's a real mix of, you know, some blue and white collar workers that are within those areas. But, you know, what I found interesting is a lot of them are actually, um, civil servants who during the downturn when states started to also contract and so forth and start cutting services, some people may have gotten laid off lots of previous house.
Note Investing
So they start looking to go to a contract, the deed route because they can't get traditional financing from a brand as well. As you know, banks typically don't like to land on properties under $50,000 because they don't make any money. So that's really where contracts with dean to come in to help a lot of people start gaining homeownership at approach. It's actually lower than those.
Speaker 2: Yeah, yeah. No, no, that's a very good point. So you have 40, 50 Kay properties. What's the LTV at roughly on what you're buying
Speaker 3: So typically it's probably between 40 and 50. The unpaid balances usually in the mid thirties, so they'll have between 20, 30 percent equity in the deal because a lot of them have been originated, uh, you know, three, four, five years ago, which we've seen with some of those areas. And from a purchasing standpoint, now you're purchasing them for, I'd say between 15 and 25,000. So when you look at the, you know, the acquisition to value price, typically you'll die between 35 and forty five cents on the dollar. If you start to creep up, it goes higher, closer to $50,000 properties, you'll start paying fifty cents on the dollar for those properties.
Note Investing
Speaker 2: Got It. Are they normally self serviced by the seller
Speaker 3: A seller will typically have their own service or a or I won't touch anything that have, whether a contract for deed where, you know, if it was Martin servicing that person for somebody, I wouldn't touch it just because there's so much risk nowadays that the CFPB, others, other collection and so forth that it's not worth the risk.
Speaker 2: And you also look, I assume when you first are looking at the, the note, if it's, if, uh, when, when the date of origination is. So it's within dodd frank compliance.
Speaker 3: Yep. So I'll look at the Ada origination. I Will January
Speaker 2: first 2013 or 14.
Speaker 3: Now I check that out. Also check for example, like in Ohio, put in over 25 years if some squirrely laws in certain states that also basically really take a cfi and make it a note. Essentially you have to foreclose, but when I get a tape in my hands, first thing I typically do is now I'll look at my investing areas. Still check, check, check schedules. I'll check the area for resale values. Data tree, which is person American, which basically have a map of the property and everything that's sold in the area so I can hold my own comps right.
Note Investing
Then the interesting thing with cse expanding may have them. You can go back into interior pictures from when it was an reo, so can go back and look at that and one thing I'll do is I'll go on google. He was a pitcher of four years ago. Here's the way to school though, hasn't been painted but look like it has a new. Has it gotten better Has it gotten worse So kind of gives you a flavor. An idea of some preliminary things that I've done during the prebid which are really focused on going after properties because I've had a lot of properties last year alone, probably eight to 10 properties that I bid on and paid for or BPO that ended up being vacant, abandoned or title issues. So that's one thing a lot of people don't talk about is that you don't require.
Speaker 2: Yeah. So I'm on the properties you are acquiring. Are you not, you not pulling the BPO and one or are you just doing that in all cases In addition to the group man,
Note Investing
Speaker 3: so I put it in. Typically they come back either accepted or counter accept the bid vendor. Usually I tell them I need two weeks for due diligence. During that time I find a local. We all care. Actually the first thing I do is I find someone on craigslist for 20 bucks just to drive by the property and snap a few photos because I want to make sure that house is still there because I don't want to go drop, you know, 125 bucks on one report, 150 on bpo or 100 bucks on a bpo that find out. So usually what I'll do or tap someone on craigslist, go take a drive by a and make sure it's there and then if it's something I want to continue on or the BPO from a local realtor, I don't know the national.
Note Investing
Sometimes I have to. When I do then I order a two owners really trace back. Then once I get the collateral from the shower, I send it to two people. I have state attorney review it because again, there's a lot of nuances like North Carolina, most contract for deeds in North Carolina not compliant because most of the major funds just use a generic template. So physically we would have to get somebody on a mom. It's not that it's sexual medical, but if you needed to take the property back, it can create kick and extend the time. Um,
Speaker 2: so what will you buy some paper in North Carolina if it's not in compliance
Speaker 3: Yes. And you, the noncompliance portion is really need to do some additional paperwork and spend some extra money, which I include that in my bid. So, uh, so it's something that, hey, I may have to spend it, but I've already included that you have a competent extended to is Orion, which is now metal source who is a collateral storage and review company. So I also have them just again check the assignment of contract, check the deeds and kind of have them do a review alongside the attorney. So kind of have two sets of eyes, two sets of eyes looking at it and the interesting thing is what the collateral for cfd use.
Note Investing
A lot of times you may get the application originally so you can see where the ball of works or where it was working at the time, what the income was and so forth. We might be a credit report in there and we also, things you can do is pick up the phone and call the person's work and just say, hey, it's John Doe there. And if they say yes, we just hang up. Okay. They're still working with the same company. That's a good sign. Now say it like that you can do is find a little more out about them. When you bid, you typically don't know who is on the CFP. You just see who the seller. Because the tapes don't have the borrower's name.
Speaker 2: Oh, the tapes don't have the bar's name, but then you can look at county records and get their name and and, and, and do a skip trace on on them. Yeah.
Speaker 3: Well, because on a contract with the owner is in some states they actually don't put who. So if, for example, where a contract works is I still own the property, they're on the contract, kind of like a car with your pile. You don't get the details paid off. So all the records still have my empathy anonymous, not the bar.
Note Investing
Speaker 2: Yeah. But don't they have, don't you have their name from the signature on the contract
Speaker 3: You do. You get all of that after, you know, after you get the bid. Um, so when you put in your preliminary bid, you're really just building off of the tape and you don't have any of that soft collateral. So I know second because I think a little different where, you know, when you get a know a tape or stuff, they usually may provide you with a credit report and you know, all that stuff. You're just working off of one and that's the only thing that gives you for your initial bitch. That's why some people are afraid in the sense of nappies.
Putting in Penn offers. They're afraid that, oh my God, there's no way I'm going to buy and they're afraid to go back to the seller and tell them I'm not buying, but if there's a reason why you basically, because you never had an information real literally just building off of the spreadsheet. So it's very indicative in that sense that you see a high rate of offers that you had accepted ended up not going through because of title issues or other things.
Speaker 2: Got It, got it. Yeah. No, that's very different than the note space. The institutional paper I should say. Yeah. It's very different because you're already. You had burned seller bridges in that. In that case, you know, you go and you put an indicative bid. Your final bid should be very close to it. Yeah,
Note Investing
Speaker 3: I knew you'd have. You have a high rate of walk, you know, walking on a deal now. I had one beautiful house in Cuyahoga County, which typically I try and stay away from. So when I, when I pulled the only report, the headstrong had 35 other liens on the property. I'm in 35 other liens on other properties. Which tie because it's property, so everything was fine except for that. And I went back to the seller and say, Hey, you're going to pay off all these liens. Otherwise it's a dead deal. And there was no, I'm not going to buy a piece of property that are still interconnected because your edge, no grass on one, two, three main street when I'm buying three pound park drive.
Speaker 2: So if they say no, I mean, that almost tells you that they'll find a sucker to buy it. Is that fair to say
Note Investing
Speaker 3: Yeah. That's one of the things recently that, you know, there's typically one major seller have to use some sucker. Um, but a lot of times you'll come back month after month and the stuff, because either the, you know, the asking price might be too high or there's issues with it. So, uh, another Gail Greenburg and I started a facebook group called notes and bolts that really focused on to talk about, you know, people had properties
that have probably a child on some of these tapes just because of the fact that if I bid on it and have a title problem, it's out next month you go bid on it and you go run one report, you just wasted 100 something dollars because you know, somebody else new. So it's kind of group that people are aware of things that are public knowledge that's out there about an asset just to try and say some people, someone
Speaker 2: great. No, that's great. And I say suckers as, as having been one, but um, but anyway, um, so, so what is your all in costs on those three notes that you just talked about that you would pull down out of that large tape because there was an issue with the rest. What are you spending on average for those three notes per note
Speaker 3: Okay. So after the acquisition.
Speaker 2: No, no, no. Yeah, you're making an offer. You have your one drive by, etc. Etc.
Note Investing
Speaker 3: YEah. So typically the only report will run about 100 2,535 attorneys review typically is between 100 and $200 bucks. Vpo might be 125 orion charging 40 bucks on their part. So all in tYpically I budget 500 is what I do and that's why I wait till I have the offer accepted and then have somebody from craigslist go by because I didn't want to start spending 500 bucks. I had Something that I talked to the local wheeler because all three were in one area. It, hey go take a ride by. And then bpo came back rate. Then the title report came back and her junk. So I actually do it in a physical format of craigslist. Go by and if the house was so good, I ordered one.
Speaker 2: Craigslist go by, you mean you'll find a realtor on craig's list to go by for the 20 bucks I'll find anybody got you.
Note Investing
Speaker 3: Typically realtors won't, but in a lot of times what'll happen is somebody may live three blocks down and be like, hey, I'll pay 25 bucks to not go on the property. Just literally drive by. That's the photo of the house, text me, I'll send you an amazon gift card and so forth. And yeah, interesting. but I've actually had people who said they would do it and it will pull them pictures from the county photos that I had already seen. So, you know, you gotta be careful in that sense, but yeah, I'll spend 25 just to say four or 500.
Speaker 2: Yeah. People will do all kinds of things. I had a, um, you, you know, who you know, who would mow lawns on one of your rental properties in 95 degree heat and the at 2:00 in the afternoon. So the answer is someone with a really bad drug habit. So I needed to get a lawn mowed. That was the only time I was going to be at the property. So I found someone off craigslist and this. Yeah, this guy was, he was gifted to it, you know, I don't, I don't agree that he should be using his money that way. But um, but anyway, he cut the lawn so, so, so. Okay.
Note Investing
So then you go, you, you put out the 500 because you, you get the warm and fuzzy, you put out the 500, everything's a go the attorney, the most significant piece right is the one of them is state attorney comes back and says, you know, this contract's legitimate. Alright, okay. And then, and then you give a and then what You have a note sale agreement and then you wire funds.
Note Investing
Speaker 3: Yup. Same thing where I'll tell the seller, hey, I'm good to go on this one, or if I had to fake a bit or whatever it is, and they'll basically come back. Typically the first loan sale agreement I have when I'm working with somebody, I then send that over with my attorney to review it.
One of the things I always make sure that's included in the long agreement is whatever I'm buying redeemable, meaning that if for some way you know they had sold it to somebody else or been invalidated, it basically protects my interest in the fact that I can get my initial, so first the first time I'm dealing with somebody for an extra 200 bucks, review that contract when they can, and then I started buying constantly from that seller the same loan sale agreement, so something need to continue to have that.
Note Investing
And then same thing, yes. Then wire the funds over because I'm. The boarding process is very similar to a regular note where the seller signs send the goodbye letter, 15 days, send the hello letter and four to six weeks time period. Again, eVerything that I've seen with contracts is, especially in the rust belt states are very peculiar and if you're trying to take any legal action, you have to have that deed recorded before you can start taking that legal action. So you really need to focus on making sure you're getting the deed recorded.
Speaker 2: Yeah, no, that's. That's a good point. I've created some land contracts in Ohio, but I've never, I've never purchased a contract for deed and it was fascinating to know I could just evict, you know, it just go through an eviction process if I needed to get someone out. So, so what did, um, I'm just thinking on contract for deeds. Let's see here. I had a thought that I'm, maybe it will come back to me but to. Oh, I see, I see, I got it. Um, so dodd frank. So what, what do you do when you see it originated after dodd frank took to effect Do you see those out there Yeah, I'm still looking for purchase.
Note Investing
Speaker 3: Yep. By dale. And there's been lawsuits what portfolio down in Georgia with a federal suit and up in Pennsylvania. I know some peOple along, some contract for deed affairs recently got letters from stating some of those lawsuits and I've got my own personal opinions on them, but I think it's like any thing in this world, anybody can see you now. People, I've seen people who have had notes where someone hasn't paid service or because they didn't understand how interest is calculated. Figure they're just going to hire someone just to turn around the,
Speaker 2: you don't have to wait for payments not to come in for service or not to know how to calculate interest. It's bizarre how they count. I mean I, I count, so this is something, this is something that I do is extremely old school, but I'm, I'm, I'm old school so I'll calculate past due interest arrears and all my notes in late fees so you know, I'll do all the, create the per diem and then do the day counter and everything else. So I like to just understand, you know, what's owed and interest and it's always bizarre to me to see what servicing comes up.
Note Investing
Speaker 3: It is very interesting. I don't go to the extent that you go to um, I'll do a rough calculation now. Get an idea of what the total payoff iS. But what I've ended up doing, because I ran into a situation where I had bought that were supposed to have an unpaid balance of $20,000 on each one of them. And I'm paying balances came in at like $14,000 for each one.
Now you might see a little fluctuations. Typically I don't bother with that, but you know, $6,000 for each one. That's a bit of a lump, so I ended up going back to the seller on a course on it and they're saying, look, we don't care who it is, we bought it from you, the seller, you need to mitigate this. And we finally got it resolved. But what I've started to do is before I acquire, I also asked the shower and I'm like, give me an updated will include the past two years and then I'll quickly just look and again I don't run the full number of accounts but I'll look just to see if it of matches that behind that. You know, basically the map is very close. Not way out of whack.
Note Investing
Speaker 2: No, but If they're self servicing you're not, you're not going to touch it because they'll just be making up whatever they want to make up. But if they have a servicing arm, are you checking to see if it's licensed They're licensed servicer or you don't care. You just care that they have an arm that focuses on servicing
Speaker 3: No, I make sure that license agreement, I'll make sure that it's included in there.
Speaker 2: Favorite quotes
Speaker 3: Yeah, because I had somebody last night sent me a on facebook mean three notes. I'm like, hey, I saw your note space. I got these three notes and first question I was asking me if I am right,
Note Investing
Speaker 2: are you lIcensed because. No. I said thanks, but no thanks chris. You sound seasoned.
Speaker 3: I just take what people tell me and just try and put a system together is really what it comes down to know and I look at it, they'll get a paper lIke four or 500 assets. I'm only looking three to five of them. I mean I can find three to five on that. I don't eat the stretch myself out to reach out to make a deal that really is not a good deal and know working full time as well. Never bought my wife a financial aspect. I don't need that cash flow coming in the door from the notes, so I'm typically more conservative on my dates.
Speaker 2: no, that's a good habit to have. And so on the three, you know, three to five notes that you would take down, um, you know, are you, are you bidding against a lot of other people in this scenario of 400 No pool
Note Investing
Speaker 3: Yeah. And typically the way it works usually does first come first served. so if I did on tuesday and I did 10,000, you've been on fridays, 12 will present my big so he doesn't know. basically he'd been put the bit into the seller, has the numbers, a broker who puts bit into the seller, uh, as they come in. And so it's time to review these critical in that sense, but you also want to make sure you're taking the proper due diligence when you're looking at.
Speaker 2: And because there's, you know, it's so state specific with all the rules and regulations. Do you, do you emphasize people focus on just a few states so they can learn all the nuances within that state
Speaker 3: Absolutely. When people say good luck to you, now when people ask, I usually tell people, hey, I'm. One of the things that I got a good amount of my portfolio is marilyn, between notes in Maryland, but I was like we talked about earlier, some people and I don't, Maryland just came back out and I ended up getting more than just to be on the safe sIde.
Note Investing
No, Maryland is a judicial state is a little difficult to deal with, but you know, my full time job is in Maryland. My attorney is based in berlin, so I have contractors, connections attorneys, title companies, everybody in Maryland for me. So it was really a natural fit to do some investing in Maryland, understand the process and good accordingly once you understand the rules. And that's really the biggest thing they can invest anywhere. Just make sure we know the rules. I mean, a lot of people don't like pork county, Illinois and because of the length of time and everything, but to know those rules and play by and just make sure you bid accordingly.
Speaker 2: That's good advice. And I think that, um, you, you know, I've found that a lot of engineers do well, uh, you know, in this field, computer scientists or anyone that can follow a process and um, just make sure each step is done correctly because it is, it's just a series of steps and just making sure that you cover each step thoroughly before you buy. Um, yeah. And then you buy, right So, so with Maryland, tell us about the license. How much did it cost and yet do you have to renew it every year I know that it's not, it's a moot point right now.
Note Investing
Speaker 3: It was for two years a total cost, 150 bucks if I recall, if a pain. Uh, but one of the thIngs that I, uh, it wasn't a difficult for me because I recently got a mortgage loan origination license. So the nmos, which is a nationwide, the lender system, which is the one system where you have to go to register for basically anything with the banking industry of becomIng a lender or an mlo.
A lot of the initial information you have to provide to them a business plan, you know, corporate structure, but you know, basically our articles of incorporation, your quality control plan. A lot of stuff I had already done because I had gotten my mortgage so I had a lot of that done so I just have to cater to some state mountain, state specific stuff. But if somebody just, you know, out of the blue I would tell them it's probably going to take two to four weeks to get out of your paperwork and just take the time to put everything together. Then it uploaded in the system. They'll probably come back with one or two comments on something. The whole process take about two months from that perspective
Note Investing
Speaker 2: and why Why get your mlo license. So what, what does that, how does that benefit you
Speaker 3: So one of my kind of looking overall master plans down the road is a contract for deed. If I ever started to originate a no one is education. So I understand the process. It's been extremely valuable and understanding things like you can't have a balloon payment in five years for dodd frank compliant. There's understanding a lot of dodd frank. So I think the course I took was 200 bucks to take her course and really understand all the compliance issues and then later on down the road if I ever get go position where, like I said, if we started a fund or with somebody or you know, people needed the originations and to do the ability to repay just being an added service that I provide outside.
Speaker 2: No, that's great. That's great to have that type of vIsion and kind of um, most people working in the now. So you're, you're kind of working in the now, but you're also setting up things for the future. So how, how is it. I'm juggling things mentally during the day. You have a full time demanding job and then, and then you get a tape in, right So you're like, you're like, I gotta do this for proposal or email or conference call, but I want to look at the safe so bad. Like how do you balance that
Note Investing
Speaker 3: Uh, one of the first things I do is, I don't know, I forget what book it was that I read, but it was essentially about just people in email and how everyone is so hung up on email and checking it every 10 minutes and you'll be in the middle of something. You check your emAil, you get thrown for a loop, go jump on something, you lose. So much productivity.
So what I'll do is in the morning I check my email for the note side at lunchtime, physically check it again, men in the evening, during the day where we check that email just Because I don't want to get in regard to that because my main focus is now my full time job and committed to them and making sure I stay on toP Of everything and do what I'm supposed to do. So I really try and just keep everything completely separate from pretty much every aspect of that portion of it. The biggest benefit I see is just not checking emails all the time from that perspective. And anything can wait three hours, four hours or six hours. In today's business world wants everything yesterday and it's just not the reality
Speaker 2: and you know what, there's. There's a, there's something to be said. Would making someone waiT a little bit and not not being like a domino's pizza delivery within 30 minutes of everything, so I'm. Okay.
Note Investing
Speaker 3: Good. that was one thing I just mentioned. The people out there listening to this business, especially with your consultants, whether it's your attorney know if you reach out to them, don't expect their response sometimes that same day. Especially with certain companies now if I get a response within 72 hours, I feel fortunate and I realized that now I may have 10, 20, 30 notes with them, but they've got funds that have, you know, a thousand notes with them. Then somebody picks up the phone and calls who, who should they servicing
The guy bringing all that money for them or the person who's basically just paying the power bill, not the guy was paying. The reality is that's how business works and I just went. Some of the people who I've worked with, when they go out on their own, that's the one thing I really relate to them now. Don't start screaming because they didn't know you're back the next day. Patients you can reach back out to them, pick up the phone call and whatever. But it's customary that it takes everybody several days. Mostly pieces.
Note Investing
Speaker 2: Yeah. And that's the thing that I'm probably, I just, you know, I, I liked the least on facebook is um, when, when someone's complaining, you know, whatever they're complaining about is just, you know, put forth solutions or just, you know, say, hey, this is an obstacle and this is what I do to work around it or something like that. But when people waste people's time just complaining about something, it's just, it's,
Speaker 3: what about people who have to report. One of the things I always tell them is, if you're going to come with me, they'll put up with a problem. Don't tell me the problem. You tell me what your proposed solution. Because now I don't sit on the black couch in the black chair and put you on the couch. I'm not a therapist now, I mean here, I also like to train people. So let me hear your thoughts are and how we're going to resolve it.
Speaker 2: No, that's great. That's great. So, so tell me about your daily rituals.
Speaker 3: Okay. So typically, um, you know, the book, the miracle morning and kinda that, you know, really I'll say, hit me in the sense of. So get up in the morning, usually I'll little before six every morning. Uh, I will meditate for 20 minutes then get up listening to a podcast or an audio book on my way to the office now. The miracle morning, the 20 slash 20 slash 20 minutes of meditation, 20 minutes of reading and 20 minutes of workout. So, uh, you know, started that were now in meditation. I was really never believed in it.
Note Investing
So I started doinG transcendental meditation, which is kind of a form that's out there that really just kind of relaxes you in a sense and reset your mindset the way I start the day then know, get up at work. Men, you know at work we have a gym so I will work out for 20, 30 minutes and I get in early to beat the traffic and the traffic is not pleasant and usually in the morning I'll spend probably 20 minutes just going through emails or if I get a mail, put something in the mail, whatever it is, just do some type of work and go out with my day job.
Note Investing
Speaker 3: During my lunch break I usually eat at my desk and do more of 19 months. We waited. I need to send some emails now. My work schedule, we five, six, whatever time I get my day job done at home. Basically put foam down, spend time with the wife and kids and kids go down to meet 9:00. Man after that, my wife sometimes nine, 10, whatever it is. And then now I'm up til 1130 every night, spending another hour and a half, two hours.
But I really started to structure my emails were one night a week of marketing, another night a week I'll just go back and check on my assets again, missing anything. Um, another night I'll look at future planning, strategic planning for what I want to do or kind of venture that I'm looking at, and so basically people will call it now I'll plan my week, usually on a sunday saying, okay, here's what I'm going to do this week because I kinda already know what's hot, what's not like anything. You plan things out here a lot more produCtive.
Note Investing
Speaker 2: No, that's terrific. Um, you know, that's uh, again, you know, I, I admire you. I think what you're doing is great. You have, um, you know, I'm sure you have a beautiful family. You have a, you know, a full time job, you've committed yourself to note investing and you've built systems in a good structure to your day. So I commend you for that.
Speaker 3: Now it's not easy. You got to stick with it when it takes, just like any career you're looking at is a business and hardest part for a lot of people is, isn't the note side of things. Once you understand that, because there are a lot of engineers and computer science people condition, they can run the numbers, but when you start to get to a certain level of managing people, a lot of people sometimes need a little more help because it's not as much information and training sometimes on that. Now work with your services. Note investing impact investor
Speaker 2: Yeah. There's a whole business side. I'm very entrepreneurial to note investment and if you don't set up the businesses and systems, then the business will eat you alive. You know, buying the notes is like the fifth, sixth thing that I would recommend doing when you first start, but. Great, well I enjoyed my time with you, chris. Seveney if you wouldn't mind. Note investing impact investor
Note Investing
Uh, you know, I didn't really entertain many questions beCause, uh, I enjoyed our discussion here and uh, and gregory told me last last week, he's like, he's like, maybe not answer so many questions, you know, along the way and say hi to everybody because it kind of messes with the flow. So, so gregory, uh, this one was for you, uh, with, with, uh, and I really, I enjoy just having this kind of back and forth, but please put your contact information in the common field, chris, because people do watch this over time as well as today. And I want to thank everyone for joining and you guys have a wonderful, fantastic, super incredible day. And god bless.