- June 24, 2019
- Posted by: august19
- Category: Podcast
As you get started in the note business, how often do you overcomplicate it? It’s not all roses in this field, and sometimes how you market the business can turn into conflicts if you are not wary. Today, Chris and Gail share their ongoing deals to date. As they highlight Gail’s experience in putting up a Facebook ad for her house, learn more about insurance and all the sweet surprises we get. Moreover, discover the maximum number of calls to make to borrowers before you send out the notice and the tragedy about door knockers. On top of that, find out what happens if a borrower destroys the house and what to do to stop tax hemorrhage.
Listen to the podcast here:
Marketing And Putting Up Houses For Sale On Facebook
We’ve had a lot going on. Also, I’ve had a lot of conversations with vendors and different entities and the continual growth of both of our companies within the note realm and so forth.
You’re always trying to find new, better and cheaper ways of doing things, which I admire. I sit back and let you do all the heavy lifting, and I adopt whatever best practices you come up with.
Sometimes the cheapest way isn’t always initially the cheapest. It might be something that you try and implement that might have some cost up front but in the long run, it could end up saving you a great deal of money. It’s all about the investment.
I find this funny and ironic in a way because you have always laughed at me for doing so many things myself. I see you doing more or looking at possibilities of doing more things yourself.
It’s all part of fine-tuning the business. I had an interesting discussion with a known fund manager, investor and attorney on the West Coast. He boiled down his secret sauce into few steps and so forth. It was very interesting to get an understanding on, as you get started in this business, how often you overcomplicate it.
You start out doing what everyone tells you should do. You figure out that sometimes it doesn’t work. The things that other people are happy with are not results or processes that we want to keep doing over and over again.
In this episode, we’re going to talk about the note. It’s not all roses in the note business. We’ll talk about some of the things we’ve had going on. You and I have had a lot of stuff going on. I can’t wait to talk about your house for sale on Facebook. I don’t know if that’s what you want to start with or finish with.
That’s the freshest wound so I need to vent. I need to share and receive support about this. There have been a few instances where I’ve bought notes against my better judgment. I am realizing when that little voice in your head when you were about to turn down a dark alley thinking, “It’s so much quicker to go to my car this way. What could happen?” That little voice is going, “Don’t do it.” I bought two loans where I had that. Both of those have been a major issue for me. They’ve been an issue all along, but it’s coming to a head. One of them is a house that I bought from Harbor in Birmingham, Alabama. This was a rare instance where Harbor, for some reason, created a note instead of a contract for deed on a house. I don’t remember who went and looked at this house for me before I bought it. I suspect because the neighborhood is a little scary. I have a friend who’s a realtor in Birmingham, but he does not like sketchy neighborhoods. It’s interesting because he is half of a mixed-race couple. In Birmingham, he seems to avoid the neighborhoods that don’t match up with his general appearance. Maybe I had someone from Craigslist to snap some quick photos. I ended up with this thing. I didn’t pay very much for it. I paid about $4,000 for it. It was performing when I bought it. It happens at times with performing notes. There was never another payment once I bought it. The gravy train was over.
After all the usual remedies, trying to reach the borrower, I ended up foreclosing. The house became mine. I should have been concerned that my bid at the foreclosure auction was $9,000, which for a decent house anywhere, it’s a good deal. It didn’t sell. That was the first clue that I was probably in trouble. I sent a preservation company over and they were we like, “We don’t know how to preserve something that doesn’t have walls and window openings with enough structural integrity around them to nail a board into.” It turns out the walls are so rotted on the inside or they’re termite-eaten. You could push them over with your hand. If you do that, the roof will fall on you. There isn’t much there that you could call a house. Not only doesn’t it look a house, but they also painted it bright orange as if to say, “This is a house worth decorating and celebrating.” Although I’ve gotten better about accepting defeat, I tend to want to bail out of these things pretty quickly.
I have to make this point about preservation companies. The preservation company that went there said in the report that the house should be demolished. Yet, when they were there, the contractor was in touch with the preservation company HQ and was making all these recommendations like, “The price you’re paying us includes boarding three windows, but there are at least eight other windows that we should do. Plus, the roof is bad. We should tarp that.” They offered to do all of this for $1,200. I feel like, “What were they doing making that recommendation, if they were going to go home and write a report that says, ‘You should tear this thing down?’” It’s like, “You should tear it down, but let me see first if we can squeeze a little more out of it for us before you give up completely.” Luckily, I did not allow them to do any extra work. This whole thing is a painful episode. I would just like to get rid of it. It’s a piece of crap. There’s not going to be any arguing any different. I’m like, “How am I going to sell this thing?” I decided to put up a Facebook ad. I’ve done very well on Facebook Marketplace in general, at least I think I have. I always get a lot of response. Has anyone ever followed through and bought anything? I’m not sure. I don’t know that there’s a big follow through.
I put up an ad. There’s one little cute picture of the house. It looks pretty good. It’s not orange yet. This is white. The headline is, “This house sucks. You can have it for about the cost of an iPhone.” The price is $500. The copy says, “No kidding, this house sucks. That’s why I’m practically giving it away. If you’re handy and can spend the time, this is an opportunity.” That’s all it said originally. This is the problem with putting things up on Facebook. You’ll get a million people. Facebook gives you a button to press where you don’t even type anything that says, “Is this available?” You’ll get a million Facebook messages, “Is this available?” People were asking me all these ridiculous questions.
I added this to the text. I said, “Stop asking questions. Here are the ones I’ve been asked a million times already. Here is the address. Zillow it to see photos from its glory days. You will get a deed. It is not a tax deed. There are no liens on it that I’m aware of. If I told you everything that’s wrong with it, it would ruin the surprise. Plus, I don’t know. I live in Philadelphia and I’ve never been there. There are no inside picks. You can’t see the inside. The house is not livable. You will need to be Superman to fix it. I already have offers more than $500 so go drive by and give me your best offer. We are transferring via quitclaim deed. Google it.” You can tell I got tiresome very quickly.
I still am the owner of this house. I’m hoping I’ve got someone on the hook. I’ve been up front. I had one person say, and this was when we were bidding it up, “I’ll give you $1,000 for it.” I said, “I’ll quitclaim deed it to you.” He goes, “We’re doing a classic closing.” I said, “I’m not paying any closing costs.” He goes, “That’s fine. I’ll pay for them.” I said, “I don’t want to prorate taxes either.” Six months of taxes are due. They’re $450. I said, “I’m not paying those either.” He goes, “I’m not going to pay taxes for a period of time where I didn’t even own it yet.” I was like, “That’s fine.”
You’re getting it for $500 or $1,000. It’s like, “Seriously?”
He wants to pay me $1,000, but I have to pay the $400 in taxes. He was like, “How about this? I will lower my price to $800, but I will chip in $200 for the taxes.” I was like, “That is the exact same deal that you offered me the first time. What is wrong with you?” I’ve been called a terrible scammer. I took a lot of screenshots of the conversations that I had with people. I have to share one with you. One guy wrote to me, “It’s the greatest, most honest ad ever. I’m looking for a house to put in Section 8 and would definitely look into it, but it would be a week before I could get by. I just wanted to compliment the ad since I can’t get by right now. Congratulations.” I’ve been called some pretty bad things on here so if you’re sensitive, do not put a house up on Facebook for $500.
I’m surprised that you passed the Facebook filter of being able to post a house for sale. Mine always get kicked back because of Fair Housing or some other item where you’re supposed to have the logo or something.
I’ve done pretty well.
I’m giving you stuff to sell on Facebook then. What we should do is create an account because it has to be a person page to post stuff that we have for sale. You can’t post it from a business page. I hate using my own personal name when I sell stuff because I don’t want people hunting me down for this stuff and constantly harassing me. We’ll have to get updates from you on that. I’ve started in Fort Wayne this renovation on this property that is from afar. I’ve attempted to start the renovation.
You haven’t done anything yet.
I haven’t done anything yet because I’m going back and forth with my agent, who I’m trying to make an ex-agent, who has been a disaster to work with in so many aspects. If you could put a list together of everything an agent shouldn’t do, I would pretty much say this agent tops the list. I’m up to a one-point time easily in double digits, voicemails and text messages without any response. I called a broker who represents her and left several messages. I haven’t gotten a response.Life and note investing are like a box of chocolates. You don’t know what you’re going to get once you open them up. Click To Tweet
Did you go over and head to the boss?
I went over and head to the boss. I’m at the point of having my attorney send them a letter and/or filing a complaint with the state because nobody will respond. Part of the reason why is somebody broke in, stole the appliances and ripped out some of the copper.
I was following her. She was mad about you for getting her in trouble with the boss.
The challenge is it’s like, “This happened. Can you go check it out and let me know?” There was no response.
That could be a vengeance move. She could have tipped someone off like, “I hate this guy.” Weren’t the keys missing also?
The key was missing from the lockbox. I had several contractors and a home inspector to go inspect the property. They were like, “The lockbox is open and the key is gone, but the door is locked.” I had somebody go over to pop the lock and put a new one on. They were like, “All your appliances are gone. It looks like someone tried to rip the sink out where the hot water heater is. There’s no more copper.”
There’s a lot of circumstantial evidence. We could nail her for this.
I’m off to a roaring start. I sent a message to the investor on this one. He was like, “That’s very disappointing.” I was like, “It is.” It’s unfortunate but that is the world of real estate investing. It’s not all roses where the money just falls from trees.
For the edification and to make everyone who has ever lost any money feel better, I probably have $8,000 invested in this one in Birmingham. I will be lucky to get $750 from somebody. That happens. Overall, I’m being philosophical about it and not crying my eyes out because this is in one of my IRAs and that IRA has done well. You take leaps. Every once in a while, you’re going to fall into the canyon. In general, as long as the trend is upward and you’ve done okay on other things, you can tolerate it.
I reached out to the investor and said, “If you want, I’ll buy you out a deal. I’ll refund your money and give you a preferred return on the thing and so forth. Just let me know.” We can play it by ear. I do have another vendor who’s going to go in. He’d give me some updated information. That will be helpful and useful to evaluate where we are at on that one. That one has been a challenge. On the flip side, I had a foreclosure in Florida that’s sold at auction. The buyer at the auction never came through. It has to go back up for auction again.
Does that mean you have costs for advertising or anything else?
Yeah. I got another $1,800, which is interesting because the only time I hear from this attorney is when they send an invoice. It’s always like, “How are you doing? Here’s an update. By the way, here’s an invoice attached.” It was the only time they ever sent a correspondence. I could email them 1,000 times. They’ve gotten better. There was somebody that I dealt with at first who was useless, would never respond and would lose files and lose everything. I’ll give you an idea. I had four loans in Florida that I had under an agreement. It was a JV of mine who wanted to buy on his own. I said, “I’ll give you these two loans.” One of them was a good deal. He foreclosed on his. I’m foreclosing on mine. It’s the same timeframe, same everything. It’s like, “Why does it take so long?” I’ll quote you the Florida costs. I think each one of these is up to about $10,000 foreclosure costs.
It’s in ten months after he has sold.
It hasn’t been a great relationship because it’s twice the cost and twice the time. I don’t know anybody that would be appealing to that. The saving grace is I did get property preservation in there to take a look at these. One of them is in good shape. It needs carpet and bedroom replaced. It’s got dark purple walls with some paint. Probably about $3,000 to $5,000, it would be something that will be a decent sell. The other one had some water damage. It’s missing a foot of drywall on the walls. These are only 700 square foot condos so you’re going to have to put tens of thousands of dollars into these things. It’s part of life and note investing. It’s like a box of chocolates. You don’t know what you’re going to get once you open them up. We talked about that on our insurance podcast that we had with Beth Boisseau-Coots. We’re talking about insurance and all the nice surprises we get.
That podcast was a real brain twister. Insurance has its own language. They have their own concepts. They have their own words to name these concepts. All of us who are not part of that world don’t know it. You seem to have a little more fluency in the language of insurance than I did. I did not know whether my insurance was a DP-3 or DP-1.
You’ve got a DP-1. Mine is a DP-3. Part of the reason I’m a little more familiar with insurance is that in my full-time job, we deal with a lot of insurance, insurance certificates and understanding insurance a little more closely. It’s something I work with a little more. I hate dealing with insurance. When I set it up with Beth, I was like, “I just want the top coverage that covers me for everything. I know I may have to pay a little bit more, but I am fine with that. I want to make sure I’ve got all the protections.” She was like, “You’ll have a DP-3 with the current space.” I’d have to check though if I have the rents.
You’re a belt and suspenders guy. I wonder when people read our show, if they try to match up with one of us like, “Am I more like Chris and I would want the maximum of everything? Am I more like Gail and I’m just going to roll with it and hope nothing happens?” These are all valid approaches.
There’s no right or wrong way.
It’s a matter of figuring out who you are. There’s a lot of that in note investing and the way you do a lot of things. It’s fine to emulate people. It’s probably good to try and figure out who more matches your personality and risk tolerance before you decide whose practices to adopt. We have a friend. It’s a married couple of note investors. She always says, “I identify with you, Gail,” because I always talk about how I want to be so gentle and kind with borrowers. I want to coax them into doing what’s best for them. I need to update her that I have had a big shift in my attitude. I’m a little more of the “off with their heads” school of thought. It’s not that I want to chop everyone’s heads off, but I want them to think I might. I want to have them focused and responsive. I want them to come to the table as quickly as possible and deal with me so that I can be kind and nice to them. I am so tired of chasing people around so that I can be kind and nice to them.
That’s the conversation I had with this gentleman on the West Coast. He was like, “Stop chasing people. Let them come to you. If they don’t respond, you send out the notice and the letter. Eventually, something’s got to give.” I was like, “That’s a good point.” Somebody mentioned to me about how accurate it is and I can’t recall based on the training about CFPB and through that collection about calling three times a week or what’s the maximum number of calls and stuff.Figure out who matches your personality and risk tolerance more before you decide whose practices to adopt. Click To Tweet
They said don’t call them more than three times a week.
The person was like, “Why call once? Here’s my number. When you want to talk, call me.” A lot of times, they’re going to be, “That’s not me anyway.”
That guy said that he sends out his own welcome letter. He parks the loan at a servicer and sends out his own welcome letter as we do also, saying, “Welcome. We are your new lenders. This is the information we have on your loan. Please correct us if we’re wrong. We’re interested in talking to you if you want to talk to us.” He sends one of those out. If people call, he’ll talk to them and work things out. If they don’t call, he immediately sends a demand letter. I love the fact that he said to you, “Don’t send a doorknocker.” There’s something pathetic about a doorknocker. It’s like someone already told you they don’t want to date you and you still keep calling them. That’s how a doorknocker feels. You have a good reason with the doorknocker. You send a Cash for Keys offer or other paperwork that someone might sign, which is great.
This individual, I don’t want to name their name because they are more low-key and I didn’t ask them to speak about them.
Just call him Mr. Big.
He was getting on me about the doorknocker and what a waste of money and stuff. I was trying to still plead my case, even with the Cash for Keys. He goes, “How many signed for Cash for Keys?” I was like, “Shut up.”
It’s to adopt the phrase, “Sending a doorknocker is a triumph of hope over experience.”
Here’s the other reason I sent one. I have a CFD that the deed hasn’t been recorded yet. I haven’t been able to send the formal demand letter. I’ve been waiting for the deed to get recorded so I could send it. In that instance, I was like, “Let me try this. That’s right. One of my borrowers made a payment on one of the doorknockers.” I got one for 100.
Anything over 1% would be excellent.
Every time I think of that, it’s like the movie Dumb and Dumber when he told him, “No, not really but she didn’t say no. There’s still a chance.”
I don’t even want to calculate the money you’ve spent on doorknockers versus what you’ve gotten back. We’ll let that one lie there but we can all use our imagination.
It’s not as much as you think.
It’s pretty much what I’m losing on this house in Birmingham.
I don’t think it’s that high.
Don’t you spend $75 each time?
It’s not every note.
It’s not 100.
It hasn’t been 100 notes. I’ve probably sent 20 or 30 doorknockers. I probably spent $2,500.
You’re still behind me in total losses on this one house. Congratulations.
What else, Gail? We talked about some ongoing things. We called that Tuesday.Stop chasing people. Let them come to you. Click To Tweet
Somebody was sobbing because they bought a house and there were four feet of water in the basement. I said, “We call that a Tuesday.” That did happen to me. I evicted someone after great travail. I’ve talked about this one before. It’s a contract for deed. This is the one that my inner voice said, “Don’t buy it,” and I bought it anyway. The borrower never responded to anything, not to any pre-legal outreach, not to any legal notices and not to the notice that said, “Your contract has been broken. We’re going to come and evict you.” It seems she did move out. She personally was not there and she moved some stuff out there. There was some furniture in the house. When the sheriff and the preservation people got there to change the locks and secure the place, there was water in the basement. I don’t know if it was four feet, but it was a lot of water in the basement. They didn’t go down there to do any work down there.
Five days later, I sent someone over to look at something and that person immediately called me hysterically and said, “You need to call the water company right away because there is water gushing out of the toilet that is going through the floor and filling up the basement.” The basement’s got five feet of water in it. I went back to the report I had from the preservation company. First of all, they said all the utilities were off. This woman went in and snapped off the lights when they came on. She was not going to go down into the basement to try to turn off the water down there for fear of electrocution, and rightly so. She also told me that my key lockbox was open. The key was in there. It had scrapes on it that looked like someone may have gouged it open. I don’t even know how easy those things are to break into. The backdoor was unlocked. The person who went a couple of days ago felt that somebody went back in there and sabotaged the place, busted the toilet or whatever. We have a situation. I’m not ready to put it up on Facebook for $500 but it’s tempting.
I’ve got a borrower who has made contact. Unfortunately, they were upset with a few things. They’ve made some payments on the loan over the last couple of years but not on a consistent basis. They realized that while they’ve paid the UPB down, the total payoff is slightly with late fees and interest. It hasn’t gotten them too far. They’ve gotten upset to the point where they told the servicer that the only thing I will be ever collecting from them again is the ashes from the property because they will burn the house down before they pay another penny to the property.
I forgot to ask Beth about that. What happens if the borrower destroys the house, malicious mischief?
Most of it will get covered, but they’ll go after the borrower personally. We can do that. Two things popped on my screen that I’d share. One is, and I never knew this, but I use Madison as a servicer. I said, “Can you send me a pay history?” They were like, “Do you realize that if you just go into the loan, click under the loan detail and click Export to CSV, you can do that?” I was like, “No.”
Even I knew that.
The second one is going to be a wild ride. I have a note under an agreement in New York.
I’m assuming we’re not talking about a condo in the Empire State Building.
I think it’s in Trump Tower where they’re going cheap and people aren’t paying. I’m trying to remember what this property looked like.
Isn’t everyone in Trump Tower Russian? You’d have a hard time chasing them back to their place of origin.
I wouldn’t. I’ve got connections.
Is this purely your mania, to have a note in every state?
I could get a note instead of a CFD.
It was a seller who I bought from in the past. They were like, “I’ve got these 25 assets. I want to try and sell them as a pool. Please bid on the pool.” I bid on the pool. I did let them know, “Four of these have gone to tax sale and you don’t own them anymore. I’ll give you an idea of what some of these assets might be like.” One thing I’ll mention is your reputation as a business is humongous when it comes to sellers. Your goal is, a lot of times, especially with these larger funds, “What problem are you solving for them?” I know this fund does not like to foreclose on properties. They don’t want to take a property back. They don’t want to have to deal with the borrower. They don’t want to have to take a property back. They’re strictly a note company. They realize that I’m the idiot who will take these properties back from them.
You are indeed that idiot.
I am that idiot that will do that. I bid on this pool. I’m hoping this gets published after I close on it. The reason why is there’s one asset in the pool that would potentially pay for 75% of the assets in regards to what I could recover from it. I think it’s twenty assets total or eighteen. I don’t know the magic number yet. There are probably four or five of them in there that are throwaways. When you’re buying at a pool, you’ve got to realize that you put a number of $100 to it or nothing but you’re still putting in a bid. They want you to take that so you will take that asset. I’ve done this in the past with them. I’ve taken it and told Madison just to board and put no collections in and write it off as a loss. On the flip side, I’ve had assets with them that I bought for very low dollar value that ended up foreclosing and had somebody turn around and buy it for $20,000, $25,000. We’ve done that together. It’s very similar to some of those instances where the goal is you want to win more than you lose. I am confident based on where I bid. That would be the case in this one. I did turn down the Kentucky ones that were in there. They had already been sold at tax sale. That was a benefit because I didn’t have to deal with Kentucky and the potential issues with licensing and stuff.
You and I bought pools. You’re in the process of buying it. This is an example of how we’re shopping. I bought ten loans for over $100,000. You’ve got sixteen that are in total. Your price is around $40,000.
It’s a little higher but not much more. The UPB on these is over $500,000. The property value is probably somewhere around $300,000 to $400,000, but there are taxes involved as well. There is probably $30,000 in taxes on some of these. One of them, the house is knocked down and the taxes are $5,000. That’s going to be a throwaway. A note will get assigned over to me. I’ll probably just monitor if I ever see the borrowers on Powerball on the front page of a newspaper. I’d be “Do you remember this debt from a few years ago? You still owe that.”
It’s sitting there. Taxes are owed. It’s going to continue to accrue more taxes. What are you going to do with that to stop the hemorrhaging if nothing else?Win more than you lose. Click To Tweet
What is my hemorrhaging? It’s not a CFD. It’s a note. I can do one of two things. I can try and buy the tax sale and I could have a vacant lot in Atmore, Alabama. The lot does have value. The lot is probably worth $5,000.
Isn’t that what you owe on it in taxes?
No. This one only got $75 in taxes. That one is to pay the taxes. I could see $100,000 Cash for Keys and I got a lot in Alabama. Some of them do have. One in Pennsylvania has $6,000 in taxes on it. I had somebody to go by the property. The house has to come down. That’s one where I could bid on at the upset sale if I’m the only one that holds a note. I don’t know if you can bid less than the tax amount though. If you could, I’d bid $50 and get the taxes or wait for a sale. If I can bid less than what’s owed, and I think you can, I’d get the property back and I don’t have to spend $5,000 on foreclosure. I’d spent $100 on a tax deed that I get. The borrower still owes the debt. I don’t know if the borrower has property or anything else, but there are many ways to try and skin the cat on that. Those are some that might get tossed. I got others that it’s a $50,000 property that people haven’t paid in four months. It’s got $50,000, it’s got a $45,000 UPB on it. Typically, that would be a $20,000 asset.
I enjoyed our conversation about my $500 house. The moment I was told it should be demolished, I called you first. I hope my husband doesn’t find out. When it’s real estate related, I call you first. The contractor who looked at it said it wasn’t worth saving. He offered to give me the number of someone who would demolish it. I thought, “There’s some additional expense. What can I do that wouldn’t cost anything?” Who did you say I could call?
It’s the fire department.
Maybe they’ll come and burn it down for the practice. It’s a genius idea. Did they do that?
They will. Typically though, the house got to be somewhat rural but you never know. You could talk to the police to see if the police want to use it for training or something. The reason why is these jurisdictions don’t want the house still there because it’s a liability. People could turn it into a meth house or human trafficking and everything. A lot of these places don’t like these houses. They’ll work with you. A lot of times they’ll say, “How do we get this thing knocked down?”
People have been asking me if this house is livable and technically, it’s not. Yet, people were living there. I don’t mean squatters. Actual regular people were living there.
One of these places in this pool, I sent this to the seller. He called me up, laughing hysterically. I still had the bid one-by-one and stuff. The ones that were throwaways, the bid was nothing. There’s one property that he wanted $8,000 for. On Google, I go on and take the street view. I snap it and send it to him. There was a recliner and a folding chair sitting in the front yard. I joked to him and said, “How about we go to the house and share a beer together and you wave your wand to have the house appear?” The only thing that was on the property was a reclining chair and a folding chair. There was no house. It’s sitting there in front of what would have been a house, but there’s no house.
There were people glamping in the front yard.
People reading would be like, “What is this guy buying? Is he nuts?” When you’re involved with some of these pools, there are going to be some of these assets that are just there. You don’t buy that in reality.
This is a fund that is known for incredibly hairy deals. You enjoy the challenge of figuring out how to make something out of it.
I had some with them that I have done well. I’ve had some that didn’t do well. Overall, net from them, I’ve done extremely well. We’ve had a good relationship together because I can get somewhat creative on some of the things that work with them that most people don’t. I’m picking some out of the blue. These are ones that I’m not truly even buying. It’s a sense they’re included, but it’s not like I’m going to be pouring money into these. They’re part of this package but it’s going to be almost tossed aside. I won’t even probably board them. Some of them with a servicer, I’ll let them go by the wayside.
I wanted to comment on you saying the house was not there. It was just the chairs were there. A number of people about this $500 house asked me if the house has to be moved. I was like, “Is that a thing? Who moves a house?”
It also could be that they’re wondering if it’s a modular or something like that.
A lot of people with this $500 house asked if I was serious. I tried to think of how many different ways can I say I’m serious? I said, “I’m as serious as Kim Kardashian’s cellulite.”
This was a decent episode. We’re sharing some of the things we’ve got going on. It’s not all roses. We started off with some real hair that we’ve got on some of these assets and stuff that we’ve got going on. That’s probably just a third of the stories that I could tell that I’ve got going on with some of these. I did speak with your friends, Melissa and Gary.
She’s supposed to be buying my crappy house with the water in the basement.
I had to stop by a property to check if it’s occupied. She goes, “I can’t tell because the grass is so high. I can’t see the house.”
You’ve got to be a little happy with Lake County, Indiana where Gary is. In other places in Indiana, I’ve gotten smacked with $250 for a grass cut when it’s not even that long. They’re very intolerant of long grass. Gary’s better about stuff like that. Bless them. Let’s do Nuts and Bolts and let people get on with their lives.Insurance is one of those things that you don’t pay attention to until you need it. Click To Tweet
What would you like to add to your Nuts and Bolts?
I would like to share one from Beth Boisseau-Coots. We talked about insurance, which I highly recommend everyone listen to. I need more information than we could pack into one hour. One of the things that I got was with my CFDs. I thought I had liability insurance the whole time. Do I have the liability insurance or not until it’s foreclosed?
You’re on a DP-1. I don’t believe you do until it’s foreclosed.
The theory behind it is that when it’s not foreclosed, it’s the borrower who has the liability for anything that happens. I’m very concerned about this. I need to figure out how to rectify it.
Yours is what they would call a lender policy where mine, the DP-3, is a real estate investor policy. Mine carries the liability throughout. If I rolled it into an REO, it’s still got the rental and the liability insurance on it.
I was letting people go look at this $500 house that they probably can get inside of because it’s got too many openings. I didn’t have liability insurance because I hadn’t switched the designation from forced-place to foreclose. I’ve changed it so hopefully, no one got hurt.
One that I’ll mention was on insurance. When you’re starting out, my recommendation is that you use the servicer for the lender-placed insurance instead of trying to hunt down and everything. On the first few notes you buy, it’s a mad scramble. I recommend trying to minimize all the little things you’re trying to get done. When I started out, I used Madison to do the lender-placed. If it’s a CFD, you have to remind them or tell them specifically, “I want liability on this because it’s a CFD.” Otherwise, they just put it into a lender-placed policy without the liability. The second thing that rolls into that is the moment you foreclose and take ownership of the property, your insurance with them expires because they’re no longer servicing that note anymore. The insurance gets canceled the day that you take title to that property. You do have to make sure you get somebody, whether it’s your local state farm or whoever. Insurance is one of those things that you don’t pay attention to until you need it. When you need it, you go look at it, you realize you didn’t have what you were supposed to have.
You don’t want to find out after something happens after that you didn’t have what you thought you had. I’m doing the best about this liability issue. Like on CFDs, you need liability anyway because you’re the owner.
Is there anything else for this episode, Gail?
No. I hope everyone is having a lovely time.
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