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Deal Or No Deal: What To Watch Out For When Making A Deal

GDNI 21 | When Making A Deal


We are all after building wealth which is why we enter into deals and bid on properties and other investments. At some point, we may end up losing money instead. Gail and Chris give some helpful insights when making a deal. They talk about taxes, attorney charges, biggest mistakes people do, JV partnership, bidding on properties, and the Three-Touch Rule which can serve as the ultimate guide if someone you don’t really know wants to do a deal with you.

Listen to the podcast here:

Deal Or No Deal: What To Watch Out For When Making A Deal

Welcome everybody to another episode of the Good Deeds Note Investing podcast. I’m your co-host, Chris Seveney, with the all-powerful Gail Anthony Greenberg. Gail, how are you?

That is my favorite adjective anyone’s ever given me. Thank you, Chris.

It’s been a busy week since the last episode.

I mentioned I bought a church at a commissioner sale in Indiana and I found out what it’s going to take to go from, “I bought the certificate,” to “It’s totally mine, free and clear.” Naturally, there is a notification process as there would be in any kind of tax sale or whatever.

You bought a tax certificate, correct?

No, this is the weird thing. I don’t know if it’s like this in other states, but in Indiana, they have tax sales like everybody else. Some of these places have massive tax bills that are bigger than the value of the property. The tax sale was in the fall. In mid-January, there was the commissioner’s sale. The bottom line is the commissioners are sick of having this property. They can’t collect the taxes. They know that now for sure because they tried and now, they’re dumping them. When you buy at the commissioner sale, they’re wiping the taxes. They’re willing to forget about the taxes and they’re just taking bids. In this case, the bids all start at $50 and I bought the parcel where the church is. I bought a vacant parcel next door for a parking lot and then two other parcels of vacant land next to that for expansion plans. Some nebulous future idea because basically my guy was there bidding and he got the two extra parcels that we don’t need for $50 each. It was like, “Why not?” We found out that the notification process, the attorney charges $1,000 per parcel. I’m looking at $4,000 to notify all the same people. It is all the same people who own all four parcels. We have bought it at a commissioner sale and they have 120 days to redeem it. That smarts a little, particularly $1,000 for properties that I paid $50 for.

In Commissioner Sales, taxes are wiped out and forgotten. Click To Tweet

Look at it in the big picture, you bought a property for $1,050. That’s interesting they do that because I know in some jurisdictions maybe like Baltimore where I’ve invested a little bit, they don’t have any of those. There are a lot of properties that just sit there that are actually decent properties or are in decent shape. They might have $25,000 in tax liens on them so nobody wants to touch them because the property might only be worth $10,000 or $15,000. I’m surprised now and it’s interesting in other jurisdictions because I know they’re all about getting their tax money. There comes a point in time where you’re not getting the revenue where if you bite the bullet and forgive some of that past debt because it’s much greater than what the property’s worth, it will contribute to future income if it gets sold. Like a commissioner sale like these properties have, which now will start getting tax money from you.

The other problem is that properties just sit there and vacant like that. They deteriorate and soon your city looks like Beirut, which is a pretty accurate description of some blocks in Baltimore. You can see what the city fathers who are being so tenacious about getting their tax money are doing to the town.

For me, my week has gone pretty well where I had received a tape of some contract for deeds from a seller we typically buy from. I was there right about when I started watching the NFC championship game and I was like, “This is great. I can sit here and go through a tape while also watching football.” It doesn’t get much better than that.

Since your team is the Patriots, you don’t even have to watch them. You already know what’s going to happen.

I wanted to get my due diligence done before that game so I could be like, “Bids are in,” and get everything done, which I did do. I put in multiple bids, probably about good two dozen plus and ended up getting offers yesterday. I got nine of them accepted and got some counters on others which I put some comments to those back to John. I will be waiting to hear back from him and start getting collateral and start doing the due diligence on some more assets. I know people are out there saying it’s a struggle to get assets or things like that. There are still some deals out there. You just need to be aggressive in the sense of when stuff comes out, you got to get your bids in earlier rather than later. Especially with certain sellers because they do a rolling bid analysis where I could put my bid on Sunday for $10,000. If somebody put a bid in on Monday for $12,000, this seller will make sure my bid is first. He submits that one first and then if I don’t acquire the property then he brings that next bid in, even though it was higher. I liked the morality of that with the rolling bid process that he does.

The takeaway is bid early and bid often, but mainly just bid. If you’re sitting on the sidelines because you’re not totally sure, come onto our sessions and ask whether your bids make sense and have a chance to be accepted. With this particular seller, as long as you make a legitimate bid not the dollar, even if it’s a low ball, it’s at least in the ballpark. That company will counter and then you’ll see where you need to be and you’ll decide whether it’s something you want to pursue. A lot of people are afraid to stick a toe in the water because they’re not sure if they’re bidding correctly.

GDNI 21 | When Making A Deal
When Making A Deal: Decent properties are in decent shape, but they might have massive tax that nobody wants to touch them.


The thing I’ll add to that is bid smart. Don’t bid in and throw a number out there that you did at the back of your napkin. Makes sure you understand the numbers of the deal. We can explain that to you.

That felt like a podcast idea that forced itself into the conversation, like how to bid. What is a smart bid, Mr. Seveney?

Understanding your risk, understanding your costs and understanding the property. What’s our specialty of the show?

We did a podcast on how to talk to borrowers if you dare. We had a great question on our open mic session from a gentleman setting up his website for the first time. He’s wondering what he can say disclaimer-wise like, “What do I have to have on there so I don’t get into trouble?” He was specifically talking about showing sample deals from our mentor Scott Carson, who lets everyone who doesn’t have a deal of their own yet to talk about and show three sample deals of his. As long as you make sure people understand that these are not your deals, but these are deals from a colleague. At first, we were confused about like, “What is it that concerns you? Are you afraid of showing a deal that isn’t yours and that people will think you’re a phony? Are you talking about the fear of saying the wrong things to a potential investor?” It turned out to be the second one. He was like, “I don’t want to run afoul of a state statute that I don’t know about on how you talk to investors.”

The biggest part of that is talking with investors in regard to raising money and raising funds for a deal.

One thing that I was able to clarify for him right away is that when you’re talking about the do’s and don’ts of the way you talk to investors, you’re not talking about state statutes. You’re talking about federal statutes that are SEC rules. You don’t have to worry about what’s different in Georgia versus New York versus Michigan. You don’t have to know everybody’s rules. You just have to know the big rules that the SEC requires.

Bid early and bid often. Click To Tweet

First, we do have to say we are not attorneys. We’re not providing legal advice. We’re not accountants providing tax advice. We’re sharing our experiences based on conversations we’ve had with either other colleagues, attorneys, servicers, and people in general.

Our things are attorney-reviewed, but everyone should have their own attorney review of any verbiage that they’re going to make because obviously, you need someone to stand behind what they tell you. If you do get into trouble, somebody needs to be accountable for whatever wording you use in your website and in any communications that you do. With that in mind, these are the things that we have come to understand through working with our colleagues in the note industry and what we have been advised by our own legal counsel. The first thing that we should probably talk about is we see lots of new people posting deals. The typical thing that happens is that a new note investor who doesn’t have a deal yet and doesn’t have any money will get something under contract. Then the first thing that they do is post the deal numbers on Facebook. That is a huge no.

The biggest mistake on that too is when they say, “Looking for JV partner.” That’s like standing out in the middle of a road with a sign saying, “Give me money so I can go fund this deal.”

It’s like holding a second sign that says, “SEC, come get me. I’m a puppy who’s lost his owners and now I’m sitting here on the road.” When can you even talk to somebody or anybody about a potential deal and discuss numbers with them?

Usually, you want to have multiple conversations with that individual. The person has to be somebody who you’ve done business with or somebody that you know. For me, typically if somebody asked me about note investing, the first thing I do is I set up a conference call with them. I tell them more about my business. I learn about them. Maybe do a Zoom webinar. Put a face with a name and talk with that person about investing in general. If they’re interested more about note investing, I’ll typically have another follow up conversation with them where I may send them some information on deals that I’ve done in the past. What I’ll do is have them fill out a nondisclosure which is, “This information is private that you’re receiving.” I also have them fill out a questionnaire which includes information about them. Have they invested in real estate before? Are they accredited or not accredited? Are they involved in lawsuits?

That’s an important one. Have you ever sued anyone?

GDNI 21 | When Making A Deal
When Making A Deal: You don’t have to know everybody’s rules in different states, you just have to know the big rules that the SEC requires.


I’ve had people fill them out and say, “Are you currently involved in litigation or have been in the last three years?” I had people say yes in the past and sometimes it’s been for minor things and other times it’s not.

These are the things that you would be doing with them.

It’s about building a relationship with somebody because if it’s something that you work with that person later on down the line, one is you want to understand them. Not only from the legal side of making sure that your venture is formed properly but also understand that investor. You’re also investing in the right deal with that person.

Let me boil this down. There is something commonly known as the three-touch rule. If you are talking to someone you have known for a lengthy period of time, you don’t have to follow a three-touch rule. If a stranger comes to you and is interested in what you do and potentially doing a deal with you as the funder of your deal, you need to have three contacts with him or her before you can talk numbers, potential returns, and things like that. What would typically happen is if you’re on social media or you meet someone at an event like, “I saw you talking about note investing. Can you tell me how that works? Do you partner with people?” You can, in that first contact, have a very general discussion with them and don’t give in to the temptation to throw out great return numbers or anything like that. That could be construed afterward as baiting someone. You generally talk about note investing, how it works to keep it very general. You have to have a second touch.

If you’re Chris Seveney, you would have a conference call and show them a webinar. Most of us are probably going to have something like a second conversation with more questions answered. What is also extremely helpful, and this is a good time to bring it forward, is to have an investor profile questionnaire where you’re asking them what is their investing experience? Have they invested in real estate? What are their investing goals? Have they ever sued anyone? General information. Have you ever sued someone like me on a deal like this? That is your second touch, getting them to fill out that. “Here’s the questionnaire, please fill it out and return it to me.” When they return it to you and you can see their information and their numbers and see that they are qualified to be at a deal with you, which is to say they’re not giving you their last nickel to do any deal and they don’t need the money to live on next week. That is the third touch and at that point, you can talk to them about hypotheticals of what could happen if you did a note deal together. Does that sound right, Chris?

It does. One thing I was going to mention about that as you start to talk to investors and things, just a little side note, is if you’re doing a deal, make sure that you only have one partner for that one deal. You can’t have multiple investors on one deal. That’s called commingling funds.

People don't sell in a tax sale in states where the tax bills are bigger than the value of the property. Click To Tweet

For pooling money and that’s a huge no. That’s what makes everyone eventually want to create a fund because then you can pull money. We should say that this is not what we’re here to talk about, but if there are a bunch of people who all want to go in on a deal together, in theory, you can have them form an LLC. Then you can do a deal with that LLC. That’s for a more advanced class on how to get around these things.

That’s a challenge because then it’s who’s in charge.

The things to know is, circling back to where we started about putting up numbers on Facebook and being like, “I’ve got this great deal. Who wants to do it with me and give me the money?” You can see based on the three-touch rule that it’s inappropriate to talk numbers with someone you haven’t met yet. That’s why that’s a huge no. The other thing is that even let’s say you put in a family newsletter and you know everybody who gets the newsletter. You still can’t talk about returns in a general way like, “I’m buying this for this amount of money. They pay this amount every month, so our return is going to be this,” or let’s say, “We’re foreclosing and we’re going to get this amount of money and then your return is going to be this big number.” You can’t solicit anyone ever by throwing out a big number like that or any number for that matter.

You can put it like, “I target this,” but never guarantee a return. I would always say if you’re going to target a number, target something that is considered the industry norm. Don’t say, “I’m targeting 70% on this deal,” because I’ve seen people put that information down. Typically, that is based on the Utopian scenario where every peg falls into the right spot. Have there been deals that have made that? Yes. Is that common? No. Most investors will target between 20% and 30% for their returns. If that was where you put, “This is what we’re trying to target on this deal, please reach out to me for more information.” One thing that I say to people is when you start posting this stuff, you don’t put looking for a JV partner. If you put something like, “I’ve got some note deals. If you’re interested in learning more about them, reach out to me,” that does several things. One is you’re not soliciting funds. You’re soliciting people to learn more about notes that maybe after three touches, they may be interested in investing in notes with you.

It’s like romance. You and I, Chris, are both married quite a long time but if memory serves, playing a little hard to get and not being like, “I need money for this,” but like, “I’ve got these great deals. If you’d like to hear about them, ring me up.” The fact that you’re not chasing people, people tend to come a lot closer if they don’t feel like you’re chasing them. There are another couple parts about that too. First of all, you don’t want to offer huge returns. You don’t want to train people to expect and only be satisfied with some insane return that you may only realize once or twice in your life and not on their deal. The concept of under promising and over delivering is a very valid concept. If you want a happy joint venture over a long period of time, by all means. There are a lot of great returns available in this business. That’s why we all love it and why we’re doing it. Try to talk about numbers that you think are motivating to them but not crazy.

Gail, I’m going to put you on the spot and ask you a question. This is for people out there. If you have somebody who may be interested in some of your deals, here’s the question a person asks, “If I invest in this deal, am I a passive or an active investor?”

GDNI 21 | When Making A Deal
When Making A Deal: You cannot solicit anyone ever by throwing out a big number.


When you joint venture with someone, there are different categories of the way you team up with people. There are partners and there are what we have, which is joint ventures. I’m very careful in my joint venture agreement and I believe you are too, Chris, for sure. The word partner never appears except to say that we are not partners. This is not a partnership and it’s not to be construed as a partnership. If you’re having a joint venture, it is one of the key elements of a joint venture that you have to discuss with the money person some key decisions. They don’t stipulate exactly, where you have to discuss what you’re going to buy and you have to discuss what you’re going to do with it. The requirement is that they be an active participant in the conversations and decision-making on that asset.

They have that ability. There might be times where they’re unavailable, you can’t reach them or they act in a more passive role, but you got to give them that ability to be actively involved.

If people don’t want to get on the phone with you to talk about stuff, just send them an email like, “I know you said you didn’t want to have active discussions about this, but I am keeping you in the loop as the joint venture. Here’s what’s happening and here is what I’m thinking.”

A perfect conversation I had with somebody was we had a property that we took back. It’s now on the market for sale and we had been through this whole process. We’ve been talking and communicating a lot throughout. That came through and now, we got two offers. We have a cash offer and we have an owner finance offer. I wanted to discuss with the partner the owner financing component that has a much better return than the cash. The conversation I had with my venture is, “Do you need the cash immediately? We can take the cash deal. If it’s something and it is in the individual’s IRA, I’d rather keep the long-term growth because we bought it at a discount. It’s got a nice rate on the owner finance term.” He’s like, “Can we do this?” I’m like, “Yes, absolutely.” That’s part of being actively involved. Having them assist in that decision and being able to communicate with them what’s the best interests of them for that deal because it is their funds that were involved. I want to throw an example out there.

It’s valuable with your investor profile questionnaire that there would be a lot of clarity about issues that could be sources of a breakdown in the relationship eventually. If you don’t clarify right at the beginning, to do a note deal, you need to be prepared for your money to be in something for eighteen months to two years or whatever you want to say it is. You want to clarify a lot of things upfront because every relationship that I’m aware of, whether it was a big dispute between the two people in a joint venture or a breakdown in the relationship. It was always over something that wasn’t discussed upfront that turned into a misunderstanding which started it. If you have somebody who’s going to need their money back in two years or maybe they need their money back in a year and you don’t tell them that’s not going to happen. At the end of the year, they’re like, “Can we sell this? I need my money back.” You’re like, “No, we can’t sell it. I told you it would sell for when it’s a season’s note because we don’t have enough months of payments.” Then it’s a big and sad argument that ends badly.

The other thing too is it’s better to always set the expectations up front and be clear. Everyone’s clear on what we’re going to do and how long it’s going to take and how much it’s going to cost and everything else. The other thing is that sometimes your funder will have a change of circumstance. I had someone who has a fair amount of money. He invested not so much with me but in other real estate things also. He had a situation where he needed a bunch of cash. He said to me, “I realized this isn’t the moment but is there any way I could get my money out?” I went and found another investor who was interested in being in that deal. I had the new investor buy him out so that he could get his money back. There are ways of solving it, but the important thing is to set the expectations correctly to, begin with, to avoid bad ill will.

People tend to come a lot closer if they don't feel like you're chasing them. Click To Tweet

What I found is everything goes well when the note deals go well. If a deal goes bad and the communication wasn’t done or something that could have been improved upon. It doesn’t matter whether you did the right thing or not. That person can still go after you in some way, shape or form. Making sure that you’ve got all your I’s dotted and T’s crossed from the outset.

Even if someone doesn’t sue you or cause you financial harm, just having people out there with a dim view of you as someone to be in deals with. This is a very small world. A lot of us who have personal integrity, we never want to wrong anyone or to leave anything unaddressed out there anyway. Reputation is everything and you have to safeguard your reputation by doing the right thing, not by tricking people into not saying mean things about you. It’s difficult to lie because you always have to remember what you said. The easiest thing to do is to have a lot of integrity and then you don’t have to worry about who you wronged and what they’re going to do and things like that.

Anything else, Gail, about talking with potential people? We talked about not soliciting openly on Facebook. We talked about making sure the three-touch rule about knowing people. We talked about making sure that they’re active. Any other comments before we roll into the next segment?

The best thing to do if you’re wondering what the disclaimers should be on your website is to take a tour of the websites of various people that you know and respect in this industry. See what their disclaimers say, and you can end up doing minor rewrites of what they’ve got or do what the rest of us do. Steal the best one and run it by your own attorney to make sure that he or she doesn’t have an improvement on it.

That may have been what I did, possibly.

I might have done that once or twice in my life.

My attorney edited it, customized it, did change a few words on it, and there we go.

You saved him a lot of trouble and saved yourself some money and you’re good. You have someone who will stand by those words even though he didn’t write them all and stuff.

The last thing I’ll mention, because we did talk about websites, is in posting things on your website. If you post deals on your website, the things I don’t do is my deals don’t show if they’re closed deals. Few things I don’t think I put is what I paid for them and how much I made on them. I may put acquisition price, but I don’t think I did. Typically, I don’t put what returns on a website I made off of deals. I’ll just put the asset with a photo and discuss what the scenarios were or what the exit strategies were. You can put, “We made a double-digit return,” if you made double digits on the deal. Something along those lines but you want to try and stay away from specifics. This isn’t as much of the SEC thing but it’s other people looking at it or investors or possibly even a borrower finds out that you’re on a mortgage and they know what you paid for. Try and stay away from specifics.

Your main website is Do you have any paperwork with your borrowers that lists that name or website on it?


That’s already a good layer. I don’t know if you planned that specifically. It’s the same for me. My entity name is not the same as my website. My website is There wouldn’t be any way for a borrower to find that website. Your approach is very good. Just don’t even go there and then you don’t have to worry about it.

I realized because I had my website rebuilt a few months ago. I don’t even show any of my deals anymore on my website. I just put some information down. Right now, for my marketing and things like that, people will find me through marketing and this podcast and some other things I do where they can go online and look me up. I’d rather have them versus seeing something online, a deal or something. They can pick up the phone and call me. I do add a link on my site where people can schedule calls with me. People have been reaching out to me that way and I find that to be better because you are able to get people to call you. I find that interaction much more appealing to have that conversation than somebody seeing something on my website and then emailing me. It starts with that first touch.

You’ll have to walk a line between promoting yourself and promoting the concept of doing notes, which is potentially very lucrative and very exciting to a potential investor. Keep expectations reasonable and being prudently private for other reasons like what you’re doing on your website. It’s a bit of a dance and we all struggle with it. We’ve covered everything in terms of the legal requirements and the main areas where you could go wrong and run afoul of the SEC rules. We’re pretty good there. Was there anything else in that vein that you wanted to bring up, Chris?

GDNI 21 | When Making A Deal
When Making A Deal: Walk a line between promoting yourself and promoting the concept of doing notes.


I think I’m good. We can roll into the next segment of Notes and Bolts. I’ll let you go first so I can pick up something.

I will take my time here. Circling back now to my commissioner sale and my four parcels that I will have to spend $1,000 a piece to notify the same people of all four of them. I have a tendency or I did, having grown up in an era where all lawyers charged the same amount and doctors got to charge the same amount and everything. I go to a lawyer and he tells me this is the price and I’m like, “Crap. I’m not happy that that’s the price but that’s the price.” Some time went by and I thought, “Why is that the price?” I’m going to negotiate with that guy and I’m also going to talk to other attorneys to see if they would work with me on that more. It made me realized that the price is not the price on a lot of things. Many things are negotiable, and you should always shop around and ask people to work with you. I’m not into gouging people. I believe that everyone should be paid fairly for what they do. Honestly, writing one letter for four parcels and charging four times. That person is asking to be challenged on that. I want to encourage people to be friendly and cordial but pushed back a little when you get a crazy offer like that.

Here’s this interesting little story and this is in Maryland. I have a property that foreclosed upon. Maryland is known to have very hefty taxes on transfer taxes. In Maryland, there is a substitute trustees who is your attorney who handles everything. When you bid at the foreclosure auction and nobody else bids, then you are the purchaser from that trustee. Typically, it takes about three to four months to have the courts ratify and approve everything. If you sell the property within that time frame, what you can do is have it be a substitute purchaser. I’ve got an asset right now that I foreclosed upon and it would have cost me about $5,000 in closing costs for the court to ratify and transfer the deed to me.

I sell the property and then the person who buys it from me would have had to pay $5,000. It seems a pretty good little shtick for the county. What you can do, which I didn’t know until I asked my attorney, sometimes you got to ask these things. I said, “I got this property on the agreement, can I somehow give it to him, so I don’t have to pay these?” He says, “How much is he paying?” It was above or equal to the price that I had bid. He’s like, “Yes, you can do a substitute purchaser. It will take 30 days, but you don’t pay those costs. They just pay them.” It’s like passing the step to him. I’m saving about $5,000 on this deal that I foreclosed upon because I’m doing what’s called a substitute petition to substitute the purchaser.

It’s interesting that you brought that up because this commissioner sale was in Indiana and I live in Philadelphia. I wasn’t there. After the gentleman who did the bidding for me, my property manager won the bids on these four parcels. In advance of wiring him the money, I had emailed an assignment where he was assigning the ownership of those certificates to me for the amount that I was wiring him. He ended up taking that assignment with him when he went to pay for the parcels. We were both delightfully surprised to find out similar things. They were able to take the assignment. They put the certificates into my name right then and there without any extra transferring and anything. There wouldn’t have been a major tax the way you avoid it with yours. It’s a good thing to remember that you can often with the right paperwork just turn two transactions into one and save a boatload of money.

It was $4,800. That’s real money. Gail, do you have anything else you’d like to add?

It’s been fun spending time with you and with all our friends in the note world, people who are interested in doing this. Please remember to join us on our open mic sessions. We had a great one and we’re making those replays available.

They are online. We post them on the Notes and Bolts Facebook group, the Good Deeds Note Investing Podcast Facebook page, and on YouTube under my company, 7EInvestments. There’s a Good Deeds Note Investing playlist there that has all those on there as well.

It has our top ten. See what you missed. We’re having great conversations. We love getting your questions. Please join us and thanks again for joining us for this episode of the Good Deeds Note Investing Podcast and go out there and do a good deed.

Thank you.

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