Scott Carson: The Note Guy
LISTEN TO THE FULL EPISODE ON:
Scott Carson, affectionately known as "The Note Guy" has been in the mortgage, finance, and banking industry since 2001 and an active real estate investor since 2002. In his career, he has acquired over $1 Billion in distressed debt, having purchased hundreds of notes in 20-30 states across the US. As CEO and Founder of the Austin, Texas based We Close Notes, Scott is the host of The Note Closers Show and Note Night in America. In addition, he is a featured speaker, educator, trainer, and coach at real estate investing workshops and conferences across the country. He's very active on social media to help grow his business, having almost 30,000 followers on LinkedIn, over 7,000 subscribers on Youtube and has posted over 1,700 videos on his channel.
In this episode hosted by Mike Swenson, we discussed:
- How Scott kept going after being shut down with his first investments as a landlord and became a full-time real estate investor and started buying notes
- How banks could hold you back from growing more quickly in our investment journey
- How Scott from a banker mindset to an investor mindset
- How to recover a distressed asset and turn it around to perform well
- The biggest and best returns on investments that you could get without putting any work into the property
- The strategy that Scott used to grow his company because of his relationships with banks that he had networked with in the past
Timestamps:
0:00 - Intro To Scott's Career
2:17 - How Scott Got Into Real Estate
7:59 - Why Should You Buy Notes And How To Make Money Off Of It
12:29 - How To Fix Up Your Note Investments
25:09 - Tips On How To Get Started In Investing In Notes
31:36 - Capital, Cashflow, And Growth
FOLLOW SCOTT
https://www.linkedin.com/in/1scottcarson/
https://www.youtube.com/@WeCloseNotes
https://weclosenotes.com/
https://www.instagram.com/1scottcarson/
https://weclosenotes.com/note-closers-show-podcast/
✅ SUBSCRIBE HERE IF YOU'RE LOOKING TO BUILD WEALTH THROUGH OPPORTUNITIES IN THE REAL ESTATE INDUSTRY
📈 GET STARTED INVESTING TODAY AND ACCESS OUR DEAL LIST!
💵 PARTNER WITH US ON BIG DEALS!
👨👩👧👦 BUILD YOUR REAL ESTATE AGENT CAREER WORKING WITH INVESTORS HERE
🎙️ LEARN ABOUT REL FREEDOM & HEAR MORE REAL-LIFE STORIES
💵 FREEBIES: DOWNLOAD YOUR FREE FREEDOM FOUNDATION BLUEPRINT
🏠 LOOKING FOR A REAL ESTATE AGENT ANYWHERE IN THE US? FIND A TOP AGENT IN YOUR COMMUNITY HERE!
👨👩👧👦 JOIN OUR FACEBOOK COMMUNITY
🎧 SUBSCRIBE TO THE REL FREEDOM PODCAST 👇
Apple Podcasts
Google Podcasts
Spotify
🔗 LET'S CONNECT 👇
Facebook
Instagram
TikTok
Minnesota Real Estate
Read the full transcript here:
Mike Swenson
Welcome to The REL Freedom Podcast where we inspire you to pursue your passion to gain time and financial freedom through opportunities in real estate. I'm your host, Mike Swenson, let's get some REL freedom together.
Mike Swenson
Welcome everybody to another episode of The REL Freedom Podcast where we talk about building time and financial freedom through opportunities in real estate. And today, we're going to talk a little bit about a few different things. So number one, we're going to be talking about notes and note investing. But in addition to that, we're also going to be talking about the lens of, you know, deciding how to choose investments, investment spaces, kind of narrowing your search, because there's so much stuff that's out there. And then addition to that, to being able to market and grow your persona and be able to kind of grow your influence. And so today's guest is a master at all of these things. And so we've got Scott Carson here, Scott, if you haven't heard of him, if probably known him as the note guy, in some relation to notes. So he's been in mortgage finance and banking since 2001, and an active real estate investor since 2002. Buying notes on commercial properties, residential properties, he is the CEO and founder of the Austin, Texas based real estate company, we closed notes, host of the note closer Show podcast note Night in America, featured speaker trainer coach. And then another cool thing is a couple of cool things almost maxed out at 30,000, LinkedIn connections, and 7000 plus subscribers on YouTube. So you also have a large social media following and over 1700 videos on your YouTube channel. And that's amazing stuff. And then another cool stat has bought over a billion dollars in distressed debt and your career. So, Scott, you've been around for a long time in the real estate and the real estate investing space. So welcome to the show.
Scott Carson
Well, my honour to be here with your audience today. Yeah, I guess you could say you can't really tell. But the grey hair is starting to fill in where the blonde used to be for the most part. So the cap, the cap definitely hides it and keep my hair cut short makes it look a lot better than versus the salt pepper. It's popping up. But ya know, I'm honoured to be here today. And just looking forward to given to your audience. And thank you. Thank you for having me today.
Mike Swenson
So why don't we get started and just share a little bit about your background, how you got into the real estate space, and then obviously the last 20 plus years in the real estate space and where we're at today?
Scott Carson
Yeah, no problem. So I was like many people, my first foray into real estate was buying my first house. In 2002. I had been married to college sweetheart out of college, I got a business manager degree I was in finance. making good money bought our first house, this is going back to 2002. So you could if you could fog a mirror a lot of times a good credit, you get a stuff. So the realtor was a friend of ours, i Hey, you know, you guys got great credit, you've thought about being a real estate investor. And I was like, Yeah, we like those fictional TV shows on HGTV, you know, flip this house and stuff like that. And I grew up in a small town and my dad on the local hardware store. So it's not anything I haven't worked on my house is like, so I felt very calm, like, oh, yeah, I'd love to be a landlord. How do we do that? Well, you can get financing 100% I'm like, let's do it. So we bought two more investment properties, roughly relatively quickly. 100% financing. Put a couple of renters in there who are working at Dell computers. We were feeling like hey, this is gonna be great. Well, three months into this, I chopped my up in my office and it clearly closing my office location. They're literally shutting down the whole branch. I'm like, Oh, shit. Okay, I was like, Okay, we'll figure something out. I'm kind of marketable. Well, I'm gonna go home and we're starting to trying to figure things out and then within a matter of a week or two, both my tenants got laid off from their job at Dell computer. Now, Mike in this list at the time, there has been a lot of layoffs here in Austin, Texas market was still hot, but I went from being a excited investor, landlord to being a deadbeat borrower not being I'll make six mortgage payments because my wife at the time now ex wife, she was a private school teacher only making like 3536 grand a year. And so we are really in a difficult tight spot like a lot of folks. Well, we were able to get rid of the two investment properties think we did a loan mod and my primary residence and for a couple years, I just licked my wounds. You know, I'm like this, I got kicked in the teeth. I don't want to do this. Again. This is not what the show's promised me. But I still want to do it. So I got back into finance. He was a banker, mortgage banker for bank one and JP Morgan Chase was one of the top bankers and still was interested in us and I liked what I was doing. I was making good money as a banker, but it wasn't ultimate what I wanted to do. And a buddy of mine that I worked with, was starting a mortgage company and he came to me saying Hey, Scott, I'm really I need some help. I'm getting wet overwhelmed. I'm going to these all these different investment seminars with a couple of these investors here in Austin. All across the country. I'd like you know if you you want I'd love to I was like maybe so I want to launch in these two and ventures that were flipping properties and creating notes and teaching note investing and speaking on the circuit across the country in front of 1000s. Every other week, I was like, Okay, this is what I want to do. And after we got our assets out of a sleeveless couple years, we're kind of back to par back to normal. And I went home and told my wife at times, like, well, you know what, you can always go back to banking. So let's do it. So made the jump. Two weeks later, I was in LA, at the LA Marriott basically pitching mortgages to investors a room of 1500. And that was basically 2004 from 2004 to 2008. I, we rent out random mortgage company, we did a lot of loans and I also got a lot of education on investing the right way not to traditional go out and buy for property, but learn creative financing, you know, owner financing, and how to raise private capital, I also had a guy who was a marketing he still is a marketing genius, I got to spend a couple of years with as a mentor. And in 2008, when everything was, you know, going crazy and then this in this time frame, I've been taking, you know, doing bought smart rentals was doing some rehabs raising some capital, doing some subject to deals or wholesaling deals, I basically left the mortgage industry sold my part of it for a buck or two, my buddy Boyd and became a full time 100% full time real estate investor at that time and started buying notes. Because that's when my mentors are teaching me and the people that I learned from taught it. And that's basically all that I focused on the last, it's hardly 1617 years now is just buying distressed debt from banks. And when I say buy notes, I'm literally buying the mortgage debt on residential commercial properties, often at a big discount, because it's where the bars aren't paying. I call it I my own version of The Big Short a little bit to be like movies out there and the Christian Bale character looking at spreadsheets all day, and then sending people out to look at property. But that's what I bought, I bought over a billion dollars in debt closed on 1000s of first mortgages on residential commercial properties, apartments, hotels, single family homes, condos, office space, you know, any type of asset class, we basically bought the debt on it and been very busy with that. And we've leveraged like you mentioned a lot before. One of the things that's helped me along that way is that we really embrace the marketing side of social media and email blasts and video along the way, and podcasts and stuff like that, that's really helped me carve out a niche and be very, very focused on what I do. Today is like Seth was one called the note guy, because that's all I really focused on. So that's the that's the quarter answer to your nickel question.
Mike Swenson
Now for people that are wanting to know a little bit more about kind of that note side, I get the idea of buying debt. So why would a bank be looking to move that? And then what's the opportunity for you? So I think part of where we're gonna go here is talking about as an investor or somebody that wants to get into investing, there's so many different vehicles that you can invest in. And obviously you you've seen value in the note so what is it here that is appealing to you? And how can you take that and make money off of it?
Scott Carson
Great, great question. The reason banks would be glad to sell notes off Now not every banks gonna sell them guy, the guy from Cal call Fornia called me this morning, about 30 minutes before we got on here. Hey, I got a note with Bank of America I want to call and see about doing a short pay. My Bank of America is not going to tell you one off note. They're too big. It's not worth their time. If you can write a $50 million dollar check them then they will talk to you but this point, Bank of America Chase city that you're not going to buy from the top five or 10 banks just not going to happen. Maybe commercial not yes, but a single family residential. No, no. But here's what you have to realise every bank out there has bad paper or notes where people are not paying, they're more likely bench more likely to sell off a commercial note than residential note because there's not a lot of government insurance and backing on a commercial debt. But every state has a different foreclosure timeframe or redemption period, like here in Texas where I'm at. It's the fastest foreclosure state in the country. I foreclose. If somebody's 90 days late on a mortgage the bank and foreclose in 21 days and take it auction and take the property back of the bar doesn't file foreclose now up in Minnesota where you're at takes a little bit longer. And then there's a one year redemption period after foreclosure. That drags things out further. So a bank would not give me a bigger discount here and on a note in Texas, in Austin, Texas, but if it's in Austin, Minnesota, where my mom was originally from, they would give me a bigger discount because it's a longer timeframe. So with banks, it's all about the velocity capital banks don't actually want to own real estate, they want to get money in and get your dollar in the bank and then lend that out 15 to 50 times to other lenders. And if they've got $100,000 mortgage sitting there, it's not producing income. It literally cost them eight to 10 times in that and fees and what they can't produce and also for every dollar amount that they have in bad, bad debt, they've got to hold a bunch of money back in reserves that they can't lend out as well. So bank would rather sell me a note at 5060 cents on the dollar, get that capital to them. Go out lend it Let's give me a discount and give that gives me the opportunity then to either reach out to the homeowner and try something different. You know, Cash for Keys, modify the loan, or maybe the bank wouldn't have done it begin with. Because I'm a fresh, fresh voice fresh face the borrower, man, there's not a lot of emotion with it. And then the back end of the bar won't play ball, then I don't mind buying hope, integrity, foreclosure and selling it or taking it back and keeping if I want to, because I got it at a discount that helps incentivize me to hold it for a period of time. Does that make sense?
Mike Swenson
So essentially, you're, you're kind of taking on the bank's problems and problem solving through that, whereas the bank's not going to want to take the time or spend the money to be able to figure that out? You're able to do that on on a smaller basis. Yeah, exactly. I mean, the fact that I know different markets, and we've got vendors and every state little bit different, you know, we've got different investors and teams and stuff like that across the country evaluated stuff, and banks don't want to rehab property that's not there, they're not there, that's not their cup of tea, they don't want to own rental property, even though some of them are started getting that far away, like Chase is looking at buying rental portfolios these days. But for the most part, a property is a non performing asset to them, it's not doing anything just really a liability more. So they want to own mortgage debt, they want to understand the leverage power of, you know, borrow, and people's money at point oh, 1% and savings account, lending it out at six 8% mortgages or 18%, credit card debt, stuff like that. And they've got the stuff that like I can go in and cherry pick, you know, I may get a list of 100 notes, I'll make offer on 50, I'll probably settle at 10 After I perform my due diligence period, and then go from there. But it's, it's really creating a win win, because they do get rid of the problem children. And I can turn those lemons into lemonade, by working out with
Mike Swenson
well, and to just for people that don't understand this, it's a message I've tried to communicate to my database is yeah, when you go put your money in the bank, you may view real estate as being too risky of an investment opportunity. But you go put your money in the bank, the banks turn around and put it into real estate. So they're doing that. And so what if you thought about taking the middleman out of it, which is the bank and go invest in real estate yourself, now you're not going to help banks, they're going to take on some of that mortgage free, you're not going to pay cash. I mean, you can pay cash, but that's what they're doing. And so in this case, you're just kind of picking off, you know, some of the bad apples here and working your way through that. But, but that's why real estate investing is such a good opportunity, because it's what banks do all day long, they invest in real estate, and so why not open up your eyes a little bit and consider investing in real estate to
Scott Carson
exactly and that's so I'm so glad you said that too. Because honestly, Jesus saves everybody else has to invest, okay? If you're putting money in a bank, you're never gonna hit your numbers that you need to do it. Because you're not gonna get the type of returns, you've got to educate yourself and find a Avenue Real Estate Investing or some sort of investment that you're comfortable with. It meets your rich risk parameters and experience level knowledge level to go out and make it and making. When I was a banker, here's the biggest thing going from my banker to an investor mindset. Your eyes are wide open, like, oh my god, we were all scammed. And I mean, the bank scam this all in, they've done it for a century saying, you know, one to 4%, say, you know, four to 8%, that's moderate, eight to 12. That's risky. Anything above 12 is risky. Well, banks, they do that to brainwash us. And to understand that, oh, we'll just give you the money and get 1%. And they're like, they're like he lending it out. It's 8% mortgage? Well, they're not, they're not making 7% difference in the arbitrage. They're making 700% difference in the arbitrage. And that's a great thing. What I love about you doing the real friend, too, is that you're teaching people like, Hey, you, I'll give me the money at six to 8%, I'll give you an above average return, it's actually we'll say it's safe, because we don't say those words are guaranteed but secured by a property that I'm picking up at a discount or a note that I'm 50 cents on the dollar is going to return a cash flow. And if a borrower doesn't perform, then we foreclose and we take the asset back so that's why I love you too. But you just got to you know, yeah, you got to learn be educated on what you're doing. Because the banks will just take in give you as little as possible to take in so that they can, you know, put arbitrage and the power of above, you know, the power of 70 tuned in their wheelhouse, not your
Mike Swenson
way into I mean, a lot of times people look at a stock market is maybe a stock market's safer than real estate or something like that. But your one one bad story, one bad news story, one bad apple in that company away from something happening, stock prices dropped too. And so there is there is a lot of risk with that as well. Whereas a mortgage is backed by real estate. And so you at least have like even in your case, right? Yeah, if the person stops paying, you still got the property, and you've got some options of what you can do with it. So talk about maybe an example or two that you Have Have you picked up a note what goes through your mind then in terms of, you know, you'd mentioned kind of Cash for Keys, something like that, fix it up, think about the kind of that lens that you're you're thinking through of how do I recover this asset? Or how do I turn this into something that's distressed? And now we're good. Maybe give an example or two of how you work through that process?
Scott Carson
Great, great, great question, Mike. So whenever I get a listing of notes, I call it a tape, basically just a spreadsheet, that gives me the address, the borrower's name, their payment history, sometimes I'll even get their social security number. All the numbers on this, you know, all the details of the note the interest rate payment history. Sometimes I'll even see notes on there. From the actual servicing company, the lender of a borrower trying to do this, they lost their job, whatever I literally get to see beneath the kimono gives you a bit of an idea. So I'll look at and see okay, first thing I look at is is the asset occupied, or is it vacant? That's one of my first big parameters. I also their states, I don't buy in, I just get rid of it. Because it takes forever to foreclose, if I have to take it to foreclosures like New York, New Jersey, I don't buying because as long as two to three years to foreclose in the States, I don't buy in Chicago, Illinois, because it's a very long time to foreclose. And don't get me started on Cook County over there. It's difficult if you don't live there, okay. But I get rid of a few states that don't buy in, I get a few get rid of a few states where the taxes are through the roof, that make it hard to make money if it's had to take a property back. So then after we narrow that list down to like our 30 favourite states, then we'll look at occupancy because if I'm buying a non performing note, my biggest bang for buck, my biggest ROI isn't actually to take the property back most of the time. If the if the interest rates at a decent interest rate, and I could get that bar back on track, and making payments for 12 months, that's the best ROI I'm often going to see. And I don't have to put any work into the property, I don't put any attorney fees into it, I literally pay a servicing company, they reached out the bar, the bar can start paying on time again, we'll do a forbearance agreement, move their payments to you know, the 12 months, they're behind whoever to the face amount. And now our goal is to hold that note for at least 12 months. And after 12 months of on time payments, then we could turn around sell that note that we bought it at 50 cents on the dollar, which is pretty normal, we can then turn around sell it at 85 cents, maybe even 90 cents of the dollar back to Wall Street or other investors. And I don't have to do any rehab or any property management. Okay.
Mike Swenson
So just to clarify on that for the average person kind of following you here. You get this because they've been behind, you're saying, Okay, let's just focus on today start paying on time, you're kind of just recouping that and saying okay, now we're showing consistent payments moving forward. Forget about the past a little bit, you're now paying consistently Okay, now you've essentially kind of shined that up a little bit, and and sell it for more than what you bought it for.
Scott Carson
Exactly instead of rehabbing the property. I rehab the bar without having to send them to the board, Betty Ford Clinic, you know what I mean? Like, kind of what was financial hiccup? You know, what happens? You lose your job, you get sick, get divorced, go through COVID? You know, a lot of things happen.
Mike Swenson
A lot of the times that people want to stay there, right? They don't Oh, yeah, move. So it's, it's in their best interest to stay in if you're willing to work with them on it. They're appreciative of that.
Scott Carson
Exactly. And buying that debt at a discount doesn't eliminate what they owe, they still owe the full amount, you know, and back payments, but I have now have flexibility because I'm into it at 50 cents of the dollar. I didn't write the note like the bank did at full, full value. So that gives me some flexibility. If it's, if it's if it's not, if it's vacant, then I'm obviously probably not gonna get the borrower back on time, you know, I may then have to look at okay, what's the foreclosure timeframe? How has the bank or the lender restarted the foreclosure process? And where is it along the path? Is the borrower can he be he or she be reached? Can we maybe negotiate a cash for key situation or a deed in lieu of foreclosure? Do they want to sell it because I'm willing to let them sell it off or even do a short sale to third party if it's in decent shape, and then they won't respond then we've got to go there to hire an attorney to foreclose if we need to. So there's different things that I look at but I got a I got specific parameters that for my bids to come in to be accepted I gotta hit my numbers if my and that's the great thing is I'm not having to bet based on the last step up just a spreadsheet online due diligence initially, because a bank they might see me elicits 100 or 1000 or somewhere in between their different notes they know I'm not going to drive out and look at all the assets on the front end I'm gonna make some initial offers and they'll look at him if we're in the ballpark that make sense and then we go to a much you know, a one week two week or one month due diligence period depending on buy in and then I'm then I'm spending money on so they're not getting BPOS broker price opinions, then we're pulling title, let's see what's on the property and making sure you know, looking at the collateral file because I'm literally really not buying the property. I'm literally buying the loan file, the right to collect is that as the bank that's what I'm buying. And then looking at that and seeing okay, if everything checks out then we're wanting funds and now we Now we're that lender, there's a letter that goes out and says, Hey, thanks for not paying me, Mike. Now you were supposed to pay Scott now instead of us. And then that's where we make our money. It's like okay, like you said, don't care what happened the past I get it. Bad things happen on your get out of jail card right now do you want to stay or do you want to go if you want to stay, you gotta pay something. If you can't pay, then let's go an alternative solution that's gonna be a win win here let you walk away. Because the foreclosure will affect bar for seven years, you know, late pays are only reflect 24 months. And so we've helped and what's great is where he got 60 to 70% of time, we're able to keep people in their houses by modifying and that's, that's really great. It doesn't affect the community in a foreclosure it keeps them in the house. It's a beautiful thing. The other 30% We're having to foreclose and take the asset back at some sort. And most of the time, it's, it's kind of friendly. Sometimes every once in awhile, we'll have that one that they want to fight you and drag out one winning because the bank always wins. And we always double check and talk with our attorneys. Hey, if we have to foreclose, are we going to win this this case is everything they're documented? That to make sure that we're a Okay,
Mike Swenson
thinking about this? You know, I share my story. So I got into real estate a little bit after you. Right as the as the we're coming down the roller coaster down the hill. And I was super excited because we bought our first property for $2,000. Less than that was a brand new construction condo or townhouse complex. They bought it in 2004. We bought it in 2006 for 2000. Last, it appraised for 7000 over and I'm like, Hey, we got a great deal, right? This is Mike right out of college, not really understanding how real estate works, we got a good deal. And then I watched all my neighbours short sale and foreclose as the values went to half of what we bought it for. And we decided to stick it out and make payments. That's how we got into investing is kind of accidental landlords now we chose to rent it out versus staying there ourselves because we wanted to go but then we went and bought a short sale on the flip side. So we got a good deal on the short sale. And the flip side allowed us to rent but I think about all my neighbours that left. I remember I was really good friends with my next door neighbour. And he basically was like, yep, can't make the payments anymore. I'm just gonna stick it out until eventually I'm gone man took off and never talked to him again. But we talked all the time when we were there. And now this, you know, the foreclosure happened and he's gone. And so that's you know, but he would love to stay. You know, it was a two year old three year old, complex, beautiful units would love to say but because the value is so low, and I think he lost his job to
Scott Carson
That happened to a lot of people there. I mean, we had so many we 15 million homeowners underwater at the peak in 2010 15 million now. People ask me all the time, are we gonna see those numbers again? No, I don't think we'll hit 15 million, we'll probably get closer to that four to five. So we're about halfway or quarter way there. If we get to eight, it'll be the worst but it's the commercial debt. Now that's really affecting more things in the residential. That's kind of a flip flop of that and commercial effects residential because of people stuff like that, too. But yeah, short sales. During that time that were that was a big I actually was we're doing negotiating short sales and like 30 Different states for realtors and investors back in the time to help them out. Because we knew the ins and outs of ability of estimators we were actually I was negotiating a short sale with the head of loss mitigation forever home bank, and her name was Rachel, I'm gonna tell you last name. She sounded like she was smoking three packs a day stressed out. And I would get her on the phone and we've negotiated I said, Well, Rachel, thank you so much. It's like is this all year? Do you just do short sales? I'm like, Yeah, we help. We've done a lot. She'll Hang on a second. And she came back and she goes, I need I need your help. I got houses I'm behind and upside down on. And all my team members are in the same book i and can you help all of us. They're all with Wells Fargo mortgage. We've been doing 12 short sales in that one department for everybody in ever humpbacks loss mitigation and still talk to him every once in awhile. It's kind of funny, but a lot of people are hurting. And it was good. I mean, it's great that you were able to make the payments and probably the value of that property is probably come back is worth more now in same same thing here what's going on the United States people that bought say a year ago, they might be underwater. Now the values have dropped down in some places like I live in Austin, Texas is one of the most expensive markets out there. For the most I don't buy a lot here in Austin. I buy it in a lot of other places because it's more affordable and I get a better bang for my buck. But like my neighbour across the street, he paid the peak, but he was happy because he finally got some it took him two years to finally find something that he could win his values down 56 grand, but he got such a low interest rate. He's like, Well, I'm not my my timeframe is not just to flip this property. You know, I was gonna plan on being here for seven or eight years. I'm like, well then just, you can afford the payments, just write it out. That value will come back in two or three years and in 10 years, it'll probably double again when it's what it's worth today. It's just got to understand the timing of The market and now everything is, things go up, things go down, things go back up. And in real estate, they may drop down, but they'll always go back up further than what they did before in most cases.
Mike Swenson
So for somebody that's considering investing in notes, what are some tips on how to get started maybe how to even research this a little bit more, and then to the benefit that you see from that, you know, like, what, what was exciting about you choosing this, this kind of your niche that you're gonna focus on?
Scott Carson
So let me let me answer that question first. And that'll lead into the answer the first question. So with me, I think one of the biggest expenses, that investors are realtors, everything is leads, right? It's all about lead gen, I need to get somebody to buyer or seller. Well, if you're investor, you're looking for deals, right. And many investors are out putting out bandit signs, or they're doing direct mail with a mailing out 1000s of mail pieces, you know, and those have a very low ROI, you know, one to 2% for direct mail bandit signs, if they get a phone, few phone calls before the zoning department picks them up or whatever they you know, that's a lot of money. And most of the time, you're getting one borrower who's in trouble, and they have one house, right? Every month, you got to revamp to try to get this. Well, what I liked about note investing immediately is that I didn't have to spend any money on direct mail or any marketing costs were dramatically reduced 90% Because I'm not mailing out postcards and letters. I'm literally contacting banks, and I'm contacting internal departments of banks. And when I get the right department, they send me a list of their problem children. It might be one note, it might be 1000 notes that I can cherry pick from and this happens every month, every quarter depend on the lending institution office, how often they sell. So that was one thing I loved. I was like, I mean, I can do this from my computer, I don't have to go out knock on doors, and I've been shot at twice knocking on doors when people are facing foreclosure. In 120 degree heat of Hades here in in Austin in the middle of summer. I can stay in the AC and do this from a variety of places. That was the first thing that really excited me about now the second thing is the discounts were often a whole lot less people were just blown away that we could pick up something even today at 3035 40% discount, you know, because market real estate so expense a lot of cases that well, we're still getting a big discount, because we are having to take on that debt problem job and have to foreclose and make it that thing, which when you buy at a bigger discount, and you're in a hot market that leads to great ROI. We don't do skinny deals. We definitely when we're gonna take a note back we want to see at least a double digit return 10 12% to us after our money costs. If we have to take a property back that we have to foreclose or deed we maybe put a little bit of rehab into something like that we want to see closer to a 20% annualised return on a lot of stuff or greater just depends on the market and days on market in that tiny stuff. So those are the three biggest things that I like about it. Every state is different. That's one thing that you got to be careful of buying in California what you buy one asset in San Diego, I could buy a whole block in St. Louis, Missouri during the meeting. So you got to know states are different needs some have a judicial foreclosure timeframe, which is a longer court system foreclosure others are non judicial, that are faster like here in Texas, it can be 30 to 90 days. You got to do some research and keep that can be overwhelming for people. I've seen realtors and investors, they get a list of 400 notes and really almost have a breakdown because they like ah you know, all these are deals I'm like no, no, they're not all deals. Know your parameters. Let's read some basic numbers on here. You know, occupied Okay, let's take 12 months of PMI times 12. And we'll divide that by what 60% Of the bounce of the value and see what kind of ROI that's a quick number to take a look at looking at property taxes you want to avoid states that have usually higher property taxes if you're gonna hold it for cashflow long term, I don't actually want to own rentals that turns things into another job I mean we've had some and we're we'll take some stuff back occasionally that we turn into rental just because the markets a little bit different and dividend rates up right i mean i When I was buying notes back in when I first started I was buying like condos in South Florida for 510 grand a pop you know I didn't mind reading them out at 1500 or 2000 bucks a month because I was only paying like 10 to 30 grand for these things I'm like it worked for a while and the bar was gone. So we'll put a renter in there temporarily while we it takes us 18 months to foreclose you know and do that kind of stuff. So that's that's the important thing.
Mike Swenson
You don't have to worry about your your neighbour listing with a different realtor and being frustrated and upset about that.
Scott Carson
Yeah, that's that's so true. And I'm not a realtor. I've toyed with the idea of getting my licence because we one of the things that we do get a lot of sometimes from banks is different foreclosure or Reo is and if I said okay, we take our property back we give you the listing make it make it a little bit but like I don't actually want the extra the extra work. I don't know I love I love working with realtors. There are some investors or educators out there that will sit there and preach at you I don't need a relatively you can do at all years now, when I'm like, That's the stupidest thing you could say, because a jack of all trades and master of none, let the professionals handle it, your time is not worth going to do an open house or trying to rehab it and sell it at the same time. I mean, realtors are worth their weight in gold, because they've got the connections, they've got access to the MLS, which is one of the greatest gold mines of deal flow is having access to the MLS, and all the things that you can pull from there, you just gotta know how to use that tool properly, and approach it from a little bit different investor mindset. You know, I love realtors, but realtors that are right out of school, they're the inside the box, anything that doesn't sound like inside the box is always illegal, you can't do that. There's a lot of things you can do creatively that are outside the box that are completely legal and make things things happen. And you just got to learn that from experience. You learn it from working with other investors, there are learning, you know, like subject to investing or wholesaling or doing wraparound mortgages. There's there's a whole variety thing there's there's a golden lane of opportunity right now no matter what what's going on with the market, whether it's up or down.
Mike Swenson
In what for, for thinking about opportunity here. So if I'm somebody who's, you know, I'm looking at investing in real estate, or I'm looking at long term rentals, short term rentals, whatever. What can you share just in terms of capital needed kind of how kind of getting started? And obviously, there's much more to this, and you do a great job training on classes and how to get started and all that, but kind of what what can they expect in terms of kind of the capital? Maybe the cash flow kind of stuff, like what does that look like to where it continues to build and grow over time?
Scott Carson
So that's a that's a really great question. Each niche of real estate investing will have different capital requirements, you're going to find the multifamily and apartment complex, much more capital intensive than taking over something that's subject to the existing financing. We financed most of our purchase about 95% with other people's money using Ira people that have a self directed IRA, or borrow on people who have retirement accounts are using that money to fund our purchases. So those that's one of the most important things you can do if you're gonna be a real estate investors understand how to raise private capital and realise that there is trillions of money sitting on the sidelines. You know, one of the things that I think we met originally back in the day off of the things I was sitting there showing people how to go to the county records to pull up people to have an IRA account that have used it to buy a rental property and money from it now, you know, in five to 10 minutes, you can find several 100 IRA investors who want to invest are looking for deals to invest, right. And that's mind blowing for a lot of people because they don't teach that anywhere. So that's some, like wholesaling doesn't really require any money. If you just want to flip paper flip contracts, you can do that make sure you double check with your local state because some cities out there, a little nasty about that. Subject twos are a great opportunity right now, which takes a little bit of capital, if you've got to learn what a subject to deal is just for us if you've got a borrower who's maybe going through a divorce or having to move because a job and they've got a mortgage with a low rate that wants to walk away from the property, but they can't sell it for maybe they owe more than the property's worth a little bit more like Hey, Miss Lisa, because they can't bring in my your we're able to we'll step and say, hey, we'll start making your mortgage payment, you're a couple months behind, we'll pay that you just deed the property over to us with your existing financing still in place. So we take over the property subject to the existing debt. And the way to make money on that is if it's at a low interest rate, you could probably either a turn around and offering owner financing to somebody. So if the mortgage is at 2%, you offered somebody at 6%. So you're making the different spread in the middle. Or you could turn it if you know for mortgage payment, PI's $1,500 a month and market rents 2400 Guess what you turn around and rent it out to somebody like 2400, you're making a $900 difference. So that's subject to vesting, that's a great time right now, which we hadn't seen that a great time for that in the past few years. But down with interest rates and some defaults, that's a great thing. That's not a lot of capital, but if you're gonna go like you want to go rehab property, that's gonna take capital, you know, not, because you can use hard money lenders or third party financing, and a lot of times that will lend on the property and the project, not necessary on your your FICO score, but they'll only land at 760 60 to 70% of the value of the property. So if you're buying it at 65%, you need 20 grand or another 10%. For repairs, you're gonna have to finance that or go borrow money from somebody else out there. So really research and understand the strategy. One of my best bits of advice is Join your local real estate club. Many there's all sorts of real estate clubs and associations across the country in every different city. But go talk to the experts who are doing deals. And if you want to find the experts and the old information has been around for a market cycle, go to the event go to the club and look at the people in the back row usually the back right hand corner. Okay when I was speaking, in Less Travelled country speak Get rid of clubs. That's who I would focus on. When I would wait further, I would go and look at the back two rows because I can win those guys over, I could win, I already went over the entire audience, you know what I mean? But those people, they value their time they're going to show up, if it's going to value, the value of the time they're going to stay in, listen, if it's not there, anything Skedaddle out of that room. But talk to the local investor, club association president who's who's doing this strategy, because there are strategies that work, but they don't always work for every market. You know, and there's a lot of education companies out there that oh, this will work in your market, you know, Buy Foreclosures in Austin, Texas. Well, we have the lowest foreclosure rate in Texas here in Travis County. That's not going to work. And so just educate yourself on the market. What's working in today's world isn't so it was working two years, three years ago. And that's, that's really important thing. If you're going to take counsel or advice from somebody, ask them how many deals have you done lately in the last year? How many deals have you done the last two years? And or how have you adjusted your investment, your marketing strategies to find deals with the market changing like it is? Those are some questions you really need to ask. And then then, you know, make your choice. Some people want to do rehabs others people don't. Some people want to be landlords, other people don't want the job of dealing with people. I like buying notes, because I'm not actually dealing with the borrowers. I have a third party servicing company and attorneys that handle that. So I don't have to deal with that. That drama.
Mike Swenson
Awesome. So just real quick, then talk about kind of switching from from investing in notes here to building a company and building a brand because that's something that, you know, you've really rolled around note investing, you know, the note guy, right? So kind of talk about what's been successful in your business or what you've done that's been successful in growing your brand and becoming that note guy as you've gone throughout the past 20 years.
Scott Carson
So I didn't coin the note guy. All right. It was given to me four nights in a row. Okay, so I was I went, I got asked to speak in San Antonio at a real estate investment club, I got asked the next night to speak in Austin, Texas, I went to two back to back nights I was speaking for an hour no investing, and I walk in. And one thing that I've been doing was I would do videos, video, video video, you know, the little Dell flip cam, I probably got it around here. I still have it. But I would just do short videos or if I you know, get an acid in I would write it up on the dry erase board and you know, talk about that deal and just share what I was doing. Because people liked it, but they didn't understand it. So I had to educate people to understand this niche of note investing to get them comfortable to invest with me. And so I walked into San Antonio and some guy in the back goes, Hey, you're that note guy. Aren't you on YouTube? I'm like, Yes, I am. Austin, Texas. Hey, aren't you that note guy? I'm like, Yes, I am. died off. I fly out to LA I'm speaking in San Diego one night in LA The same thing happened. Hey, you're that note guy. And like, I guess I'm gonna start calling myself that note guy. Because I was doing other things doing some wholesale and stuff. But that's what really stuck out. And so I was like, okay, so I just said, I got it. I got to share my journey. I started sharing on a regular basis because you got to be in front of people. I mean, we have such, humans have just low attention spans of eight seconds, a goldfish has a nine second attention span. And with social media, we're eyes and ears are being distracted on a regular basis with podcasts videos, Tik Tok, you know, Twitter, whatever, out there. You've got to share what you're doing. And the way it came to me. The smartest marketing mind I've ever met is a mentor of mine. His name is Roland Frasier out of San Diego. And I got to work with a couple years. He's like, Scott, are you going to be doing this for just a year? I'm like, no, because two years, like no, I'm playing I'm probably being invested for the rest of my life. You know, investors never retire, we just get smarter, you know what I mean? And he goes, You have to keep that in mind that every video every marketing piece, every post out there, that's a seed for the long term, you never know who's gonna see it. You never know when somebody's gonna come across it it's gonna hatch an opportunity of somebody either reaching out to you to get more information or to invest with you or to send you a deal. And so you got to understand that so that's the thing that I took was like, Okay, I'm gonna share on a regular basis I'm just gonna start sharing videos sharing deal flow when Facebook Live came out and Gary Vee made that famous by doing the Gary asked Gary Vee show, I started doing video every day, a Facebook live every day about what I was doing. And when I did that, I really saw a skyrocket approach of followers as social media is really taken off then. And that led into us creating the no closer show, which now has 761 episodes. And we were doing a Monday night webinar with students and investors out there talking about deals. I started as a conference call, you know, a party line basically back 13 years ago. It evolved into the Monday night which was a webinar and we rebranded it to Night in America, and we've been doing that Monday night 7pm Call zoom webinar now for 13 years straight and that's helped brand and just sharing it put it all on YouTube so everybody can see it. And we've embraced podcasting, but we were big into the YouTube Get aside first off, because video is 24 hours a day, seven days a week advertising another. I think the biggest thing is people understand that I'm just me, I might not be the smartest guy in the shed, but I'm gonna shoot you the truth. And I'm not everyone's cup of tea, I screw up, I make mistakes, I'm Will I'm always glad I screwed up there. And this one crap, we missed something, let's get this fixed, you know, or this deal didn't turn out, we had something happened. Let's go through how we fix it. Now we solved it or Hey, don't do that. That's that doesn't work that worked three years ago, this doesn't work like it is today. So I'm not afraid to ruffle some feathers. I'm not afraid to poke fun at myself. I think people really appreciate that. Because, you know, everything I do is an up business thing. You know, green and black. You know, those are two brands, everything we see is green, everything is black. And you had email blasts that we'd send out monthly to ask me to just come back. So I was looking for the green email, because I know I've got a note that you've been, you've been emailing for six years now I got something on my desk that I can send you now. And that's, that's just the consistency. I have a realtor friend of mine who's one of the best REO agents in Atlanta. She just recently retired to Florida. But she was working with me and I said, Hey, this was just a few years back when Google Plus was around Google Plus offices go on, I said, this great little article, share it on Google Plus, you got to share it everywhere. It's like casting a line or making your net bigger, sharing it everywhere. And she's like, okay, whatever. Well, she did it. Of course, what did she do, she never posted again to Google Plus, a year and a half goes by she's in Austin. And we're doing like the social media serve as like, pull up your accounts and take a look. And she'll see pulled up a Google Plus account, here's this one post from two years ago. But it's got 1800 views on it. And she's like, Oh my God, when like, imagine, if you've been posting the entire time, how many more views you would have, and how many more leads you have gotten by just sharing where other people aren't. And that's the biggest thing about building a brand is just, you just got to be consistent realise it's a long game, it's not a short game. And just keep sharing, you know, some people are very tight knit about their best stuff, I'm like, give away your best stuff. Because that's when people will realise, hey, this guy or gal if they give this away for free now I really want to work with them. Because if I've got to pay for something, I know I'm gonna get better service or better quality stuff, whether it's their my listing agent, or my selling agent, or I'm gonna invest with them. I you know, that's, that's the one of the biggest things that we get is people say, I've been stalking you for six months, you know, or I've been listening to you. And they don't call me to just ask questions a lot of times, I mean, they do, but it's all like, Hey, I've been following you. I'm ready to sign up for some coaching or I'm ready to sign for class, or, Hey, I got 100 grand to invest. Let's can I put it with you? And I'm like, yeah, maybe, you know, go from it. But that's just consistency in sharing consistently sharing just one of the biggest things you can do to find success long term. Couple things that
Mike Swenson
you mentioned, that stuck with me is, you know, talking about note Night in America 13 years, you know, I've worked with a lot of real estate agents and a lot of people in real estate where it's like, I'm going to try this for a month, or I'm going to try this for a couple months. You've been doing that for 13 years. And then the other thing that you shared that that's really wise, as you said, just because this worked three or four years ago, it doesn't work now. So that means you have to be doing something for three or four years, or trying something a certain three, four years before you decide it doesn't work. And I think so many people are so impatient, because they do one or two things, you know, I've worked before with an agent that did a mailing for three months, didn't see the results. So they stopped doing the mailing, well, then, about three months later is when they got a hand raise from that. And it's like, oh, wait a second, like I just stopped that three months ago. But if I would have continued with it. And so that makes sense in to all the video you the video content you put out like the 1700 YouTube videos, people can watch that when you're sleeping. People can watch that when you're on vacation, people can watch that when you're sitting watching a football game, and you're helping to prime the pump for six months, I've been stalking you or 12 months, I've been watching your stuff. And now I'm ready. You've got to have 12 months of stuff for people to watch to then be ready to raise their hand right away.
Scott Carson
It's so I'm so glad you brought that up. So like no not in America, we do that via zoom. It's we made it we try to make it simple, because our note night in america.com, it takes you to resume to register. So we try to buy this custom URLs that are easy. But if that's changed, that's evolved. I mean, we'd have 200 to 700 people live in a webinar. But when I did Monday night, it's Windell down, people are tired a zoom, it's dwindled down to 30 to 50 people live, but I live streamed to YouTube, so we get views on there too. And then we take that video and put it rebroadcast on YouTube the next day, and that gets more replays and we take the video and restreaming across our LinkedIn and all our other social media. So that gets several 100 views. We turn take it into a podcast and turn it into an audio podcast we'll get on average 200 to 500 views in the first month. So if I just did like most people only got 13 people the night they stopped doing it. I'm like, it's that our investment. I'm going to record something in that what 13 People I'm very, very grateful for this. 30 people show up live and I send me an email and I follow up with them, but it's also it's just the tip of the wave, like, I know that most of the views are gonna come afterwards. And if I stopped doing it, then I'm really losing out on all that afterwards.
Mike Swenson
And the other thing to think about too, because I know on YouTube as an example, views tend to be low. For some people, that's probably especially people getting started, have those couple of years, they click on something and go to your website, and then they're going on your website and looking at stuff too. So it's, it's like fishing, you've got 1000s of lines in the water 1000s of lures under the water that eventually something's going to catch a fish. And so if you're just focused on Oh, I only had five people watch that video, you might have five people watching on YouTube. But if you're also posted in all these other places, that stuff starts to add up. And it's doing that for 13 years, like you said,
Scott Carson
yeah, so let me give you a bit of an example. Like all and this is, this is one of the things from Gary Vaynerchuk, that stuck with me, you only need to have one view to make it worthwhile. Just one view not that go viral. If you if you take a look at my channel, like in, we hit 1700 50 videos in May seconds. So let's just say if you take three 350,000 views as what was another milestone, we hit and divide that by 1700 videos. That's an average of 205 260 views per video. Okay, not heaps, I have something like 25,000 10,000 15,000, stuff like that. What's what's funny is this is my second YouTube channel, the first one had 800 videos and got shut down a few years back, so I had to rebuild it, do it. But those 205 views a day, that leads to roughly three to four subscribers per day that come back and watch. And so we average about 6000 6000 7000 views a month on that. And that's the thing, it's like, that's one of my best legions is just dumping content, something will come from it. So we'll comment. And like you said, now I've got 1700 hooks in the water, versus one or two hooks, you never know what somebody's searching for. And what you'll be found for and it's it's most important thing is to be consistent and try to be narrow, I can't I can't say that enough to find your one or two niches. And stick to that those niches if you try to. And this is one of the biggest mistakes we see with like real estate podcasters or real estate educators, they try to be a master of every strategy. And that you can't be the master of every stretch, because everyone's got different timing and marketing and stuff like that. And investors, they they sign up for all these classes, but they never have time to implement the strategy, the marketing for one strategy, because they're busy going to another class or another workshop, you don't I mean, so pick one or two niches and just focus on that, just stick to that give that six months, nine months, a year, you know, make sure it's working in the market you're in or what you were focused on. But focus on the data give time for people to see because 80% of sales are made after the fifth contact the fifth view the sixth view, six times, somebody's seen you to take notice. And that's why we tried to speed things up by sharing it everywhere. So at some point, maybe they'll see it once or twice in a day, maybe see three or four like okay, this note guy, I need to spend some more time because he finally said something that makes sense to me. And I'll reach out to him go from there. Real estate
Mike Swenson
agents are you tired of letting the busyness of life get in your way from achieving your real estate investing goals, I'm super excited to announce we've created the real freedom investor agent tribe, it's a place for you to come get educated and network with others so that you can make sure that you're hitting your real estate investment goals. So find out more on our website, real freedom.com Click on the store link, we've got a membership we've got a mastermind group and some private coaching as well. Check it out, I've priced it super low, the goal is to get you in not have price be a determining factor to keep you from your goals. So come check it out, schedule a call with me, and we're happy to see where your real estate journey is gonna take you. So Scott, for people that want to reach out to and learn more, how can they do that? Or where can they find you?
Scott Carson
Really easy, you can go to our website, we close the notes.com we closed notes.com We got our podcasts on their video training. If you want to learn more about note investing, I have classes on there but I'd love to give your audience we have a one day class that we teach called note weekend we teach it usually the third Saturday of the month. It's recorded so you can go to take a Saturday, Julie nine bucks. But since you're listened to Mike's podcast, and you're smart because you're listening to its podcast, and intelligent and the best looking and most intelligent people out there, listen to Mike's podcast here real freedom, okay? You can use the code podcast, go to note weekend.com use the code podcast. It'll give you the class for free, no cost. You can watch it in real time and go from there. So really easy note weekend.com code, podcast all caps. You get it for free. And if you've had any questions you guys reach out to me on any of my socials on one Scott Carson. Yes, Mike said I got just south of 30,000 followers connections on LinkedIn too. So it's a great place to connect with me on there too.
Mike Swenson
Awesome. Well, thank you, Scott, for coming on kind of sharing your story. Why notes are a good investment vehicle for you and kind of how people can process through choosing an investment lane and then to just Yeah, talking about it. growing your business through social media, so thank you so much for coming on and sharing.
Scott Carson
Hey, honoured to be here. One last thing everybody, make sure you do this. This is the most important thing you get out of this whole episode. We as podcasters love to hear from our audience listening to the podcast here right now make sure you hit the subscribe button and then go on over and leave a five star review from Mike we as podcasters love to hear from our listeners and you can do that Mike's kicking ass taking names in the podcast is delivering amazing wealth. You can take a minute or two to do that for Mike as well.
Mike Swenson
Because I know how to choose good guests right?
Scott Carson
That's right, baby.
Mike Swenson
That's right, the best possible thank you guys for coming on. I appreciate it.
