Keeping Investments Legal And Documented

GDNI 42 | Legal Documents

 

Real estate and note investments are not only about buying and selling properties. You have to reach the back end to see what actually happens in the process. Investors have lawyers to keep them backed up legally, and that is where the stress sometimes comes in – keeping legal documents in order. Gail and Chris kick off with what the usual legal paperwork is for such as transfer titles, trustee deeds, and deed of assignment. As they share their journey on CFDs, find out the process in performing CFDs versus performing notes and if it is a good fit to do notes in an IRA. Also, hear Gail’s epic story about hiring a crooked contractor as they address more problems on titles, the risks with having the property in your name, and more.

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Keeping Investments Legal And Documented

How are you doing Gail?

I’m good. Thanks, Chris. I’m mired in paperwork.

It’s the joys of note investing. Nobody ever wants to talk about the paperwork that’s involved in that.

It is like nothing but paperwork with little breaks of either agony or ecstasy.

Even putting together a loan sale agreement or JV agreement, the paperwork to go in and edit and I’ve got mine to be automated and stuff as you could only imagine. Even that takes twenty minutes. It takes some time to make sure you put everything together.

There’s no getting around that. I know you are the automation king but everything important. I would still end up reading it all anyway to make sure.

With our segment on what happened, why don’t you discuss what the paperwork is for?

I’m in the middle of three closings and I cannot keep them straight. People and companies keep going. Papers are coming. One is a contract for deed that has been a difficult borrower, difficult rehab process. I’m relieved that it’s happening and yet I’m confused because I’m also buying a property. These are both in Indiana, which complicates things.

What are you buying?

My husband is buying but I’m part of the deal because he’s a first-timer. We set up a self-directed checkbook IRA for him and it’s buying a property, his first of many. I hope he loves it and wants to do more. We have ours, yours and mine, in Cleveland and Oklahoma. I don’t know what the actual motto of Oklahoma is but it should be the hardest state to buy or sell a house in because their title companies are brutal. I don’t know if anyone is a Game of Thrones fan but they are the Lannisters of the title world.

I Googled their motto.

What is it?

Let me say it because I believe it’s Latin and then I’ll tell you what it stands for, “Labor Omnia Vincit,” which stands for, “Labor conquers all things.” In this instance, the labor they put you through is something that conquers all.

It absolutely destroys you. Thank you. Own it, Oklahoma. I see that you are.

I’m closing an asset that was a note that was an investment property by an investor that had abandoned it. We foreclosed in December. The sale was in December or January but it was in Baltimore City, which is notorious for taking months to get it ratified. We had a buyer in Maryland. It’s a trust deed state. There’s a trustee who holds the deed. When you foreclose, the trustee deed needs to get signed over to you as a high bidder. What we’re going to do is we’re going to sell the property and then have it transferred over to the person buying it. We filled out all the paperwork and got it signed and stuff and that buyer walks.

Renovating is one of the most baffling things. Click To Tweet

We have this document that is in court getting ready to get approved to transfer into their name and then they walk. We had to fill out more paperwork to cancel it and that will get a new buyer and the title company is like, “Where’s the trust? Where’s the transfer?” We call it a substitute purchaser like, “Where is this?” I’m like, “We don’t have one. We had one but we canceled it.” It was transferred into my entity. A lot of times what you try and do in states like Maryland which has high taxes on a real estate transfer is you try and do that before it gets transferred into your name because it’s considered a double closing. I bought it. I have to pay $3,000 and then the person who buys it from me also has to pay the $3,000. They’ve always had to pay it but if I can beat the clock on it, we can save some money.

Some places don’t have a transfer tax. This was a delightful surprise to me. When I transferred ownership of a house in New Orleans, whether the house is worth $20,000 or $10 million, you pay $325 to transfer and record the new deed. They’ll catch on eventually. I want to give a word of warning to anyone contemplating a purchase in Oklahoma. Christopher Seveney is brave enough to pursue those deals but if you think you’re going to buy something that you might eventually sell, be warned. We’ve got a title report listing the deficiencies that had to be solved but it had over 30 points on it. It looked terrifying when they first gave it to us but on closer examination, the first nine were things like, “If there’s a mechanics lien, we need a release. If there’s a mortgage, we need a release.”

A lot of things that didn’t even matter, it wasn’t relevant at all. The problem is those buyers and all realtors in my experience are not into the details. The details are filling out the purchase agreement. They’re all about that. In a situation like this, everybody looked at this list like their hair caught fire. I ended up taking this email or whatever it was, a PDF that listed all these things and turning it into an Excel document, putting it up online and putting what it says and then next to it what it means. What we’re going to do about it and it turns out everything was normal. There’s some paperwork we have to chase down.

We had to find someone who quitclaims deeded this property to harbor a few years ago. In Oklahoma, a quitclaim deed has to list the marital status of the people on the quitclaim deed or else you have to find them again. These people had the same last name and we don’t know if they were married and I was like, “They both signed it. What difference does it make if they were married or not?” It turned out they were worried about whether the two of them were married to other people because the deed didn’t specifically say, “We are married to each other.” I love these giant treasure hunts for missing borrowers or missing paperwork. I’m into it.

We talk about how painful this has been which I would have knocked the price down a few bucks to have it. On those two deals in Oklahoma, it was 500% return, not too shabby.

We were well-compensated but you let me do it all. It wasn’t that hard.

Who’s the genius of the group? You stuck me with New Hampshire.

I did most of that too as I recall.

I’ve got a few questions that popped through. I was talking more about the contract for deeds. Those are what we see a lot of. We’ve talked about those in the past, but the contract for deeds is something I don’t think you can ever get enough education on. I get new stuff happening to me every week on contract for deeds.

It’s interesting that we’re on this topic because this paperwork for Indiana that’s not going to be there unless there’s a FedEx truck parked outside waiting to take it.

You can drive there in about eight hours. You have five hours to decide.

This is Richmond, Indiana. I drove to Indianapolis once, it was ten hours. It’s relaxing driving at night. This was a classic. I would love to tell the tale of this because this is a classic journey of a CFD. We bought this, and it’s a pretty nice house in Richmond, Indiana. At the time that we bought it, there was a borrower living there. We had high hopes that we would be able to contact him and we would get a quick feel of whether he was going to reinstate or whether we needed to ease him towards the door. The guy totally ignored us. We were nice calling up saying, “What’s going on?” We reluctantly but with the feeling there was another choice started legal, and I guess he got demand letter but still didn’t contact us up. He moved out. There was actual notice of the hearing that is the main court procedure where you get potentially the house taken away from you. The judge that we applied for a default judgment which is usually easy to get in a lot of places means that the people who have moved out, they don’t want it. They’re gone and signed it over to us. The judge refused to do that because the people had moved out and he wasn’t sure that they had been sufficiently notified of the court proceedings. Since my attorney’s view was we don’t know where he is, we have to advertise.

I always thought advertising means you put a little tiny ad in saying, “We’re going to take your house. Why don’t you call us?” It’s pages and pages in one place. It was going to be upwards of $1,000 in Indiana to advertise this. Hearing that and we could see that the house was in bad condition, we’re going to have to spend money on it. We were trying to be a little frugal and also because I enjoyed the chase. I was like, “Forget that. I’m going to find the guy. I’m going to get him to sign a cancellation of the land contract.” I did find him and he did sign. That turned out to be easy but then we started renovating. You and I are going to do a whole show about renovating because renovating is one of the most baffling things. I’m never sure how much to do. I never thought you should do anything more than the absolute minimum to make it habitable and clean enough that someone would be willing to sign a new contract for deed. I’ve had a lot of success sprucing the place up and amazingly selling some of them retail. We did talk about that on the show even though you could sell a house under $50,000 or $60,000 retail. Who are the lenders who lend with those small amounts?

If I’m doing a rental, which I have a few of, the ones I’ve done have complete rehabs on the inside with new flooring, new appliances and new kitchen. The big thing I did is also electric. I replaced all the outlets because if you have a plug that doesn’t work, it sparks or something, you’re going to spend $150 to have an electrician come out and replace one outlet. While you’re doing a new kitchen or something and you’re putting under counter lights and you’re doing something like that, replacing outlets in a house is $20 per outlet.

Did you say under counter lighting? Are you making any improvements like that on your CFD houses?

GDNI 42 | Legal Documents
Legal Documents: People love to buy CFDs because you can get your feet wet for not a lot of money and you have the whole adventure of actually getting the house and then figuring out what to do with it.

 

On a CFD house maybe not, but if it was a rental, some of my rentals I typically make them look like an A plus. When you do that, you get better tenants because also you can get more. I’ve got one rental in a place that rents are typically between $400 and $450. I’m getting over $600 for it. The other one I’m getting $1,650 for which typically they go for about $1,400. On average I’ve been getting between $100 to $250 more a month and the money that you put in to do that when you look at it, the long-term cashflow versus the money that you have into it pays off.

We did not do that in this place. I love admitting that I made a huge mistake because I feel it’s empowering for everyone else. This was not at the beginning of my career. This was a couple of months ago. I hired a crooked contractor. We won’t go into all the reasons I thought he wasn’t crooked but suffice it to say, it was a big mistake.

This is the house with the carpet and the floor. For everyone who’s reading, this is a great story. I’ve heard it seven times and it gets better every time.

Since Chris mentioned this detail, let us explain then. We re-carpeted and the people did not even stretch the carpet. The carpet had this wavy motion and it looked like there were sea monsters under there. I decided to splurge to have the living room hardwood floors refinished rather than putting more wavy cheap carpet on there. We should be post photos on our website. You have to see this floor. Not only were there giant rusty nails sticking out of it but it appeared that they basically shellacked the whole floor. They used shellac which I didn’t even know it existed anymore. Everyone uses polyurethane but they even polyurethaned over spilled paint on the floor. It was horrendous. It was ugly and another upsetting situation. There’s a splotch of white paint and that weird little checkerboard entryway that’s two feet. These are not the before pictures. Those are before and after picture.

I like this one.

Is that all the junk outside? You had that too where they supposedly remove all the debris, but they move it. They don’t remove it. They move it out of the picture and then they move it back into the picture so they can take a picture of the other area.

Are we going to do the work twice? A lot of times, that happens if you fill a dumpster and they’re too lazy or don’t want to wait.

Thank you for sharing that. I’m super humiliated. There’s a happy ending to the story because I have a contractor in Indiana who’s awesome and I should put his pictures up too because he went and he didn’t live that close to this house. He and his buddy took their trailer and they moved in there for almost a week and they did such an amazing job. When we first took over this house, realtors came and said we could not get any more than $10,000 for it since it was in such bad shape. It is under contract for $49,900. Even having messed up, we’re landing on our feet. We’ve had it for a year. It took a long time.

I have an asset in Fort Wayne that I’ve got on the market and I’m contemplating because if I put probably $15,000 into it, it would probably increase the value by $30,000. That’s something that is tempting.

I can tell you that you shouldn’t hire, but I don’t know about all the other ones you should not.

That’s a good story and I’ll ask people out there if you have questions about this deal or something specific on CFDs, we’ll be happy to answer any questions you have related to them. We’ll talk more about CFDs and things that you have on them because that’s what’s in the market. I’ve seen a lot of CFDs and starting to see more REOs pop-up as well and if you’re into owner financing but those can be hairy to deal with as well.

A lot of those have serious title problems. The title problems, liens, depending on how they became REOs, they’re not necessarily foreclosed and wiped clean or even if they are foreclosed like code enforcement and the taxes are still on them, proceed with caution.

One thing I can’t reiterate enough about CFDs when you talk about liens, taxes and so forth is you have to remember that your company name is on the deed. If you have a borrower that has trash out in front of the house or doesn’t keep the house up in the county or the jurisdiction, they look at who’s the owner on record of these things, and they’re going to go after you for it. What I found interesting is in Ohio when I ran into this problem, I called them up. If you ever get something always call them up, talk to them and let them know you’re a human being and stuff. I said, “There’s a land contract. It’s recorded. It’s his stuff. You can send me all the notices, I’m going to forward them to him, but it would be great if there’s a way you could start hitting him with the fines as well.” That’s what they did. They stopped bothering me and started going back after him for it. We do have a question that came through about evaluating pricing on CFDs compared to nonperforming notes and performing notes. I’m going to start with performing CFDs versus performing notes. I prefer performing CFDs over performing notes.

First of all, the borrower defaults then you’re probably still maybe in a forfeiture process and there’s more upside if you can get the property. Let’s say you have a $10,000 performing CFD and the property is worth $25,000. If you buy that as a note, they default. Let’s say you bought it for $7,000, 70% on the dollar. If they default, say it costs $3,000 to foreclose, the most you can collect is $13,000. The $10,000 due plus the $3,000 in legal but you’re in it $10,000 to collect $13,000. It’s still not a bad return if you get it, but then it’s 30% good. If it’s a CFD, I’ll send you in for sending the default. You spend $1,500. You may have a $20,000 or $25,000 property. With CFDs, you’re more inclined to have a borrower not file bankruptcy than you would on the performing note side where they may, if there’s equity involved in it. I like bankruptcy notes, but I don’t like when a borrower files bankruptcy. You like to buy them when they’re in bankruptcy and not when they file.

When I buy them in bankruptcy, usually a little secret, the seller sometimes will put in what the principal and interest are and say it’s $400 a month, but when you look up on PACER, they may owe $30,000 in back fees which we’re paying an extra $500 a month. It’s not $900 a month. I’ve had two of them like that. It depends on how far the borrower is behind. If the borrower is not that far behind, they file bankruptcy, it’s a stall tactic. If they’re way underwater then they file, then it’s good because what can happen is if you’re going on a note, if you’re in foreclosure and if you file bankruptcy once they file. If they finally can’t make the payments, then you get the motion for relief which is to pull the house out of the bankruptcy and when that happens, they’re done. There’s no more saving them from the property. The reason I say that is because of the first question about bankruptcy, buying them versus the borrower going into them because it’s a point where it’s about us filing bankruptcy. Usually, you’re at the point where you spend a bunch of money to try and take the property and you want the deal to go away and close out versus continuing to go back and forth with the borrower.

You always know different things and you always learn from others because we're all out there having experiences and learning new things. Click To Tweet

My first foreclosure is still ongoing. I’ve had it for a couple of years. I celebrated my second anniversary in February. I thought it was May 29th. The attorney told me he goofed up for the first time. The reason I contacted them and discovered this at all is that I got a notice from FCI about a loss mitigation request. It turned out to be this hand-scrolled message from this guy, the borrower. He’s offering a buy out to me. This guy owes me upwards of $70,000, plus I paid $11,000 in taxes for him. He’s offering me $29,000 which I don’t even know that he would be able to pull that together.

To answer the initial question though, the valuate pricing, I price the CFD the same as a note. Sometimes I may get a little more aggressive on a CFD than a note if it does have a lot of equity and there’s a chance of getting the property. I’ve got one calculator and I run everything through it. I see where the numbers and I target a certain set return on my deals. The one thing I’ll say about when you’re evaluating, but you’re analyzing it and not just looking at a number. I look at when was the last time they paid? What was the last pay date? How far behind are they, which is the next payment due date? How are the taxes on the property? If they’re paying taxes and they might be behind in making payments, more likely they’re probably going to want to stay. There’s a lot of stuff like that to look into. I’ll Google the property. I Google the people to try and find out as much information on them, but the process for CFD and a note for me is the same. What about you?

I think there was a time when people felt notes were intrinsically more upscale but in theory, the borrowers were thoroughly qualified at the outset of the loan. Unlike CFD which anybody with a pulse could get a pulse and $500 in some places but I always like CFDs. People love particularly when they’re beginners to buy them because you can get your feet wet for not a lot of money and you do have possibly the whole adventure in front of you of getting the house and then figuring out what to do with it.

The risks with the property in your name and for me something pop-up on him and so forth and you have other properties in those counties. That can be a problem but one thing because I’m dealing with an issue that I’m sure is going to get litigated about a utility bill that I have. My attorney is like, “If it was a note versus CFD,” and I’m like, “It doesn’t matter because it gets attached to and it supersedes the first mortgage anyways. Whether I was in the first position on this or a CFD, if the borrower doesn’t pay it, they slapped a lien on, it’s going to be a super lien against me anyway.” He’s like, “You’re right.” CFDs and lower priced assets, I’ve got some CFDs where properties are worth $50,000, $75,000 or $100,000-plus.

That’s not common that a house of that caliber would be sold on a CFD.

Sometimes they are.

Sometimes, weirdly, people buy modest houses and improve them on a CFD. That’s happened to me exactly once but enough to prove that it can happen.

I Googled it to check something, and the house is listed for sale. Technically they can’t sell the house, but the borrower is off to a double closing. The borrower is paying. He’s been performing and he’s got it listed. It’s listed for more than what he owes me. In this instance, I’m like, “If you want to sell it and cash me out, I’m perfectly happy with that.”

They’re not going to stand in his way. We should have a lightning round of what happened. Does anyone want to talk to us about what happened to them? Is anything happening or has peace wrung out across the land when all the children are sleeping?

Dave Pollio from SN, he’s been pointing out a lot of assets that I’ve seen come through. I haven’t bid on any of those because I’ve been working on some of my other loans getting boarded and everything else we got going on and so forth. Anyone on here bid on any of those or have any luck? What do they see on some of the pricing? We have a question, “How do we get on his mailings?” If you’re asking about Dave Pollio, Google him, he’s with SNSC. I got an email from somebody who’s using Quest, “Quest asked for the date my entity was incorporated. He’s asking about some documents for my entity making four of them is still a valid entity.” That’s a JV partner, and we’re working on a request. It’s someone we know and she’s like, “Quest changed things up a bit and they’re asking for this information.” I’m like, “Sure.”

Quest is asking for a lot more things and I should also say that if anyone’s thinking of using FCI as a servicer, they’re asking for a lot more things. I sold a loan. The new owner, the buyer called up. They decided to keep it at FCI because there’s a general rule that if a loan is performing, don’t do anything to jostle the borrower because they’re fragile. They don’t want to shake them up. Everything is already at FCI, the documents that they normally look at. This guy was like, “How do I get it into my name?” They immediately were like, “You need to show us the new deed.” The deed is granting it to you within a week or we’re de-boarding it. Show them the deed within a week. When have you ever gotten the deeds to anything within a week of buying it?

The other thing too is Equity and Quest want to see the deed in the assignment or the note estimate before you buy it. I’ve had that happen a lot in the past and Equity Trust wants that. I’m like, “I can get you a draft copy, but I’m not going to get assigned one because nobody’s giving me signed deed without having paid for it.” The other thing too is with Quest and this isn’t a knock against them, but they won’t take electronic signatures. I use DocuSign and we need a wet signature. I was like, “Here it is,” and like, “That’s electronic. Read the last item, number 21 of the agreement says we don’t accept electronic signatures. We still want a wet signature.” A question popped up because someone mentioned they’re confused because they thought utility lien is stuck with the person and the property and it didn’t go with the property but with the individual and that’s a state-by-state thing.

You say that in your experience, electric often goes with the borrower but water and sewer stay.

Water and sewer in every jurisdiction stick with the property. Electric stays with whoever is on the build. Indiana passed a law that the water and sewer are now going to stick with the person who’s in the property and not the actual house which is good. Most jurisdictions, if it’s water and sewer, expect that stays with the property.

Do they have to record the land contract in Indiana for that to be the case? There are many questions and not many answers.

GDNI 42 | Legal Documents
Legal Documents: Checkbook control is probably the best way to go if you’re responsible and good with your money.

 

I record the land contracts in Indiana. I don’t believe you have to but a lot of the ones I have are recorded and all the assignments get recorded as well.

I had an interesting moment with the title company too on this purchase we’re making. I was giving them the IRAs and LLC documents. I foolishly mentioned that it was an IRA and everything stopped. They’re like, “We have to figure out what we need.” You don’t need anything. It’s just an LLC. I didn’t want to say anything.

I have a solo 401(k) which is an LLC and I changed the name of the company. I had to create a document that also now transfers Solo 401(k) into the new entity name.

Do a DDA.

The actual LLC is a sponsor of the 401(k), that entity changed. The entity changing the 401(k) has to try explaining that to a servicing company because we need to have a new one. Everyone I use, I send the form on. It’s still the same entity, the old entity and you don’t have to change those notes. Thankfully, there are still some in there. I start buying my 401(k) notes and stuff in the new entity name. I realized that based on my conversation with my co-owners and associates, I have to change it again. Everyone’s going to hate me in about a month.

I’m not sure if I am going to remember this correctly, but a friend in Michigan who you know well told me that they were unable to buy with Quest Roth IRA funds a property in Detroit because Detroit will no longer allow Quest IRA FBO ownership of properties. Does that sound right to you? Maybe it’s Quest.

Maybe it’s Quest that’s doing it because I can’t see how a city can ban somebody from owning a property. Do you think that would be discrimination?

Particular entities, I don’t know. Maybe it is Quest. Quest is tightening up the operation. To have this person into setting up a checkbook IRA, we’re going to be hearing more about this in the future as these custodians become stricter.

The other thing we’ve rolled from CFDs or custodians is I have somebody who wanted to buy a partial from me through Quest and then they realized the fees involved with Quest. They also wanted to buy a performing note. I saw someone posting every time you pay the servicer $35 a month if you cut him a check, they take fees on top of that. Some custodians do and some don’t, but that’s one thing to absolutely check. What do you get charged for? If that happens, you can do one of two things either now have the servicer bill you quarterly or advance pay some of it. You’re not paying a ridiculous amount of fees and so forth. Checkbook control is probably the best way to go if you’re responsible and good with your money because if you start commingling on it, then you can get yourself in trouble. Are there any other questions from anybody out there? I got the chance to meet Eric Hyde who is a note investor who Gail and I know well.

I did the warmup with him in Philly, and then I sent him down to you.

He started with Gail as a JV partner. We’ve known Eric and Eric has been out in the West Coast and he started a training session as well. We’re doing some training for investors. He’s been traveling the East Coast and we were sharing some war stories and so forth. If you’re in an area where some investors who make notes and stuff, it is worth it to sit down and have coffee with them for an hour or two and share stories. Hearing how he does certain things I’m like, “That’s a good idea,” and then he was asking me certain things. We’re both bouncing things off each other and brainstorming. If you put him and me together, we’re definitely not masterminds.

When I saw Eric, he had his family with him and we didn’t want to bore them to tears. We kept the shop talk to a minimum. I don’t know what cool and interesting things Eric is doing. You’ll have to fill me in some more.

He mentioned that you and him were selling one of the assets as well. It goes to show for people who are reading this, Eric started with Gail.

September 2017, he was a little newborn note investor. He was a guy who wanted to know about notes at that point.

A year and a half later, he’s bought a lot of notes. He started his own meetup group and training. He’s rock and rolling in the business and doing well for him and his family. People don’t get upset or distressed if it takes a while to learn this business. It took me a few months to buy my first note before I finally got over analysis paralysis. The challenge is a lot of Eric’s training or these other training, and you take them over a day or a weekend and stuff and want to get going. Think about if you went to college for a weekend almost in some sense that you can learn a lot that weekend, but there’s still a lot more you have to learn. I’d say probably the first time you go to one of those seminars or stuff, 50% of the stuff that’s being taught is valuable information that you don’t even know is valuable. People don’t know what you don’t know sometimes.

Go with your gut thing and forget all the chatter about everyone. Click To Tweet

I think the biggest thing is to team up with somebody which as you say, Eric did that with me. One of your JVs took me out for coffee. There are tons and tons of investors on the East Coast, but they do trickle in once in a while. One of the things that happened at that coffee is that I put him together with another relatively new investor who’s been going gangbusters. I thought the two of them would be a great support group for each other, embolden each other and also share the learning journey. It’s working out that way and that’s helpful to have people on board. I get to talk to you every day about notes. Who in the world would I be talking to? I’d be talking to my dogs. They never give any meaningful response about notes at all. It’s handy to have people you can know the same amount and you can know different amounts. You always know different things and you always learn from each other because we’re all out there having experiences, learning new things and bringing it back and that’s cool.

Our discussion did pop up two questions. They’re tied together about purchasing notes in your IRA and wasn’t sure if you could do them cause you had to be passive. You can buy notes in your IRA. Granted I’m not an attorney or IRA custodian but from what I’ve been told and what I’ve done is I’ve bought notes from IRA. Passivity is I don’t do any of the borrower reach out. I have a third-party servicer. If we take the property back, I hire a realtor, property manager or whoever it is. It’s no different than buying a rental and hiring a property manager. You’re buying a note and your property manager is essentially your servicer. You can’t act in a way where the labor that you’re doing is increasing the value. Making decisions, that’s still passive but you’re not actively involved in calling the borrower, chasing it down or improving the property personally. That’s from the custodians I’ve talked with and who manage my IRA. Gail, do you have any last second thoughts?

The gentleman who set up my checkbook IRA is an attorney and I’ve had many conversations with him about what can and can’t be done. You can flip houses in your IRA too. Flipping houses in a way is more concerning about the rule that an IRA is not transacting business or if it does too many deals.

The custodian person I talked with said if you flip a house here and there, it’s okay. If you’re actively flipping houses, then it’s a big no.

That’s what I’m saying because then it becomes a business that you’re funding with IRA money which is a no. He said the thing about notes is they’re similar to stocks and bonds. They are securities. They are intrinsically passive as far as you’re not going to go work like you could on a house you’re flipping. You might inadvertently go over there and do some work. That not happening and you have to hire people to do most things anyway legally. You can’t service it yourself. Most of us wouldn’t think of servicing anything ourselves anyway. It’s a good fit to make notes in an IRA. We have to be careful of the rules, disqualified people and prohibited transactions and it’s not that hard to stay inside the lines.

I have one last question for you, and this could be in my Notes and Bolts. I know you have no answer for this. I was speaking with an individual who was interested in knowing more about my company, more about me and what I do and so forth. They asked me, “Would you mind if I did a background check on you?” I’m like, “Go ahead, all the power to you.” The FBI went down. I think I’m clean if the FBI passed me to give me a mortgage broker license. His next question was, “Where can I get one pulled on you?” TLOs and stuff before and stuff that don’t break into from the criminal stuff.

They will say if there are any criminal records.

Is there an upgraded report that you could order? I was curious if there was a firm out there that you’re aware of like Dickie Baldwin even or somebody.

If there’s specifically about something with criminal or civil judgments?

He wants to look to make sure that I don’t have 50 people suing me or that I’ve been arrested for Ponzi schemes, everything else, laundering money or whatever it may be.

We have a friend who uses the Whitepages premium for $5 a month, he said. I haven’t signed up for it. When you run someone’s name, they won’t give you any detail but they will tell you in the initial search whether you have judgments against you or a criminal record. If you see a small number and you’re thinking, “Maybe that’s a library fine or a parking ticket, let me delve into it,” then you can buy a more extensive and more detailed report from them. When you think about it, what are the real questions that you would ask? What metrics or specific pieces of information would he be looking for that would tell him that it’s a go with you or not?

If I ran a report on somebody and if they were a one-time a drug dealer or something like that, I wouldn’t want to partner with somebody honestly because how do I know my own money is not going to that?

The whole issue of whether you’ll get your money back. That seems like talking to other people who had experience with that person as someone to invest with. That’s going to be way more telling than court records.

I always tell people, somebody says, “Here’s my company brochure or flyer.” I always joke, “Take it and throw it in the trash honestly. It’s like going to a job interview. When you go to a job interview and you put a resume together, are you putting a shitty resume together? No, you’re going to sell yourself as much as possible, and we’ve all made mistakes in our life and so forth and we made big mistakes probably. I’m not putting them on the resume.

It’s amazing that we’re talking about this because I admitted that I got scammed by a scammy contractor. One of the things I’ve always done to avoid that is getting recommendations. You have a way of knowing if the people they’re giving you as recommendations aren’t family members, girlfriends or something. They did a great job. It’s difficult. I was shopping on Amazon, and there were products that had thousands of glowing reviews and then I always clicked on the one-star reviews to see what the issues are if somebody has an issue. The things that those people are talking about are profoundly bad that I find myself wondering like, “Are these good reviews, all legit?” I was looking at a company and they had a number of poor reviews. It was a bank. I’m applying for a loan. These people had poor Yelp and Google reviews. There was this other website called social something and it was a .me and they had 1,600 reviews on there and an overall score of 4.5 out of 5. I thought, “If it was a social whatever, who are those people?” Is that something you can buy your way into? You never know.

GDNI 42 | Legal Documents
Legal Documents: You have a way of knowing if the people they’re giving you as recommendations aren’t family members, girlfriends, or something.

 

Companies do that. They pay people in other countries to leave good reviews.

You can buy a number of followers on Facebook. You can buy reviews. You can buy all these things. It’s like followers on Twitter, followers on Instagram. There’s a feeling of unreality to things. We all better redevelop our intuition because ultimately it ought to come from us, that we all go with your gut thing and forget all this chatter about everyone. I’m sure they’ll figure out that you’re Jesse James, a modern version desperado.

It’s a good thing to do from looking to partner with somebody to hand them a good amount of money. I’d like to know a little more than a ten-minute phone call. Thank you for joining us. A reminder to follow us and join the Notes and Bolts Facebook group and sign up on the GoodDeedsNoteInvesting.com page and to make sure we’ll probably be putting out a tape. I know someone asked a question if direct sources put out a tape. I haven’t seen one. We will also probably be putting something out. Gail, make sure to scrub those assets for any that you’re looking to sell off to some investors.

We’ll dig deep and pull out some stuff.

I’ve got some stuff I’ll be pulling out and refresh some of the stuff. A lot of stuff sold, probably 78% of stuff sold. It’s always good. Put some new stuff out there for people as well. Hopefully, people are interested. Let us know and bid on them.

We’ll be taping another regular show. Keep those cards, letters, and questions coming. Go out there and do some good deeds. We’ll see you soon.

Thank you.

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