- September 13, 2019
- Posted by: august19
- Category: Podcast
Growing your capital and acquiring more assets takes more than just knowledge; it also takes guts. On this Open Mic Night episode, Gail Anthony Greenberg and Christopher Seveney discuss the asset pool or primarily performing assets that they bought from the past. As they talk about the process of acquiring pools of assets, they also remind everyone to read reports and not just look at numbers before closing any deal. They offer some recommendations when it comes to raising money and the proper ways of approaching clients. Know more about what Gail and Chris have to say about growing your business and what it takes to have pools of assets that look promising.
Listen to the podcast here:
Open Mic Night: How To Grow Your Pool Of Assets
I was thinking in the last episode when you mentioned how Melanie and her husband Phil Jacob invest in notes together and work together and stuff. I started thinking they’re the perfect couple because let’s just say my wife and I loved each other dearly but doing business together would be two classic type–A personalities. It would be challenging.
I can tell you with total certainty because we’ve tried it, that my happy marriage is totally dependent on never doing business together. Particularly my husband and I are both writers. When we’ve tried to collaborate, it was terrifying. There are not enough therapists in the world to undo that knot. Let’s talk about notes. We have an interesting topic. We’re going to talk about taking down a pool of notes because we are very fortunate to have taken down our first little tiny bitty pool of notes in November or December of 2018. As we’ve grown as investors and gotten bolder and earned the trust of sellers, we have now had the opportunity to do even bigger things.
We are in the process of taking down multiple pools, but we’re going to focus on one right now because that one’s come to fruition of under 50 assets. It’s a 50-asset pool of primarily performing assets. It’s a seller we bought a lot from in the past. Originally, we‘re not looking at bidding on a bunch of the assets that were in there. He came back to us and said, “Why don’t you take them all?” My first thought was it was a great idea. Gail, what was your first thought?
We should preface this by saying that I went on vacation and right before I got on the airplane to be out of touch for five hours, you said to me, “This tape we’re both looking at, why don’t we buy the whole thing?”
You’re like, “I’m Getting on a plane, I’ll talk to you after five hours.”
It was so frustrating because I couldn’t share my hopes, dreams, fears and concerns with you. By the time I landed, you had the whole thing buttoned up. There’s a plan in place and then over the holiday while I was supposed to be with my loved ones in mind and body, I was there walking around with them, but I was thinking and we were texting. It was not a problem because let’s face it, your kids, once they’re adults, they don’t pay any attention to you anyway. No one seemed to notice that I was on my phone a lot, but it was fun. It was totally crazy. Now, we’re doing it again. We don’t even have to text because I’m back from my vacation. Even having done that once, now it doesn’t seem like such a big deal. This one’s twice as big.
It’s the first one. To give people a little background, it’s roughly 50 plus assets. The seller is very keen on first come, first serve basis. He did get some bids prior to us putting in an offer and take the entire tape down. As part of this deal, we reached an agreement to sell off those assets that he was going to sell this to these people and honor their price on those.
It’s a big win-win for everybody because those people still get to buy what they wanted. For us, one of our strategies with this tape is going to do note arbitrage and sell off ones that people want. It makes the number of assets that we’re going to be left with to work out much smaller. The buyers are happy that they get the ones they want. They’re skimming the cream off the top and making the difficulty level a little higher.
That’s one of the benefits of it being a performing tape. There are 30 assets that ended up under our possession. It’s a little more, but whatever the number is. With them being performing, it’s not like it’s a nonperformer, that it’s a burnt down house that was leftover in the tape. These are all paying. It’s one of those things where the goal will be to manage and liquidate some. If they’re not liquidated, it’s okay. It’s paying. It’s not like it’s depreciating because you have to front at the taxes, the insurance and all that for it. That’s one of the reasons why when we’re looking at taking down a pool, we went to more of a performing route of assets because I feel there’s less risk involved.
Full disclosure, these s going to need some work on the collateral side to clean up some stuff, but that’s not a thing based on all the attorney reviews we’ve had. There’s nothing that is fatal to any of the assets. There was a few in there that were that we now put back to the seller. For the most part, it’s doing a little bit of cleanup, which MetaSource is assisting and getting a lot of that stuff cleaned up anyways for what we can get cleaned up. It’s been fun. It’s interesting because the speed at which it went at is the thing I look back out on and I’m like, “Holy moly,” reviewing the collateral on 40 something assets.
Fortunately, having built a good reputation in this space and working with a lot of other investors, funding the deal wasn’t a challenge. It was a single investor that funded it. It’s a simple agreement. There are other ways that you could fund deals like this through either a 506(b) or 506(c) that could be available to individuals. If you’re not familiar with what those are, I definitely recommend you to possibly look into them. They also take time to set up. That’s why I always recommend the people, if you make some money on deals, have an attorney put one together even if you’re not going to publish it. In case something like this ever comes up, you could quickly move.
We should also say that there is a considerable investment in having the legal documents drawn up on. It’s probably not going to be something you’re going to do your first few months as a note investor, by all means. If you’re going to take down a pool and you’re going to have multiple investors in a fund, your obligations to investors expand greatly. More money is in play, more personalities are involved. Don’t do this until you’ve got game in terms of your knowledge. Part of the reason that sellers are willing to part with them at attractive pricing to take down a whole pool is that they do have hair on them. This is not something for novices, but this is something to look forward to and build towards. If you’re planning to be a serious note investor and even make a career out of this, this would be the natural progression, but don’t hurry. Learn the business.
Don’t think after two or three notes or two, three deals, “I’m going to go.” You can, but it’s not something I would ever recommend.
Do a ton of notes.
Even when I hit 50 notes, I didn’t think it was at a point yet where I want to go that route. It probably wasn’t until I had 100 under my belt. I know people who have done much less deals and have gone out and do it. The other thing I’ll mention on that when you start out with doing a fund is how to manage them. That is something that we can provide feedback on. My recommendation would be to start small with one versus going out raising $5 million because from my understanding, there are a lot of intricacies. I’ve talked to other funds that people have had. I talked to Andy Mirza who’s got Coastline Capital. Dave Van Horn got one out there and others have them as well.
Crawl before you walk, walk before you run. Take your time.There are lesser risks involved when doing more of the performing route in assets. Click To Tweet
The question I’ll ask you is when you’re buying a pool of assets, what are some of the things that are different than buying three to five assets or one asset at a time?
One of the things that were very fortunate for us in this is that the seller was providing O&E reports and BPOs. Even though we are skeptical about BPOs in general, typically seller-provided BPOs. It does give you some information. The title reports were incredibly helpful because even though they are one-owner title reports, which is not what we recommend and it’s not what we buy individually when we’re buying them, it showed us very quickly what the issues were going to be with each one. It allowed us to separate out and refused to purchase as part of the deal the ones that had such high taxes that there would be nothing you could ever do with the note to exit it profitably.
Those are good points. What we did is we still had a company go out and take current photos of all the properties so we could see the current conditions. From there we reviewed the BPOs and I posted one on Facebook, where the woman who did the BPO said, “The house needs no repair. It’s a three-bedroom, two-bath house in Houston, Texas.” It’s hilarious because she shows a picture of a vacant lot where you could see the house was torn down or probably damaged by a flood.
I think they have robots doing BPOs.
One thing I always tell people is don’t just look at the number, read the actual report. I went through all the BPOs, compared it to the pictures that we had. They’re very similar because BPOs weren’t that old. I looked at some of the comps and tried to get a feel for where they’re correct. We did some of our own internal BPO processes to confirm a lot of the values. A lot of these contract for deeds were originated back in 2009, 2013. In many instances, they may have overpaid at that time, but a lot of them now have the equity in them. Not only have they paid down for the last eight, nine years because they were performing, but also property values have gone up since that time.
I love to buy stuff that doesn’t have a ton of time left on it. I bought a note for a contract for deed for my daughter. It’s got two years left on it and it’s performing. I feel like what better insurance is there than someone who’s only got two years left? Those people are not going to stop paying.
I’ve had three of them like that where they ended up paying it off typically right around tax time. I loan two of them and it was due towards the end of the year. At tax time, both of them came and said, “Can we pay this thing off?” I’m like, “Yes.”
“You’ve got a few thousand dollars left, but here you go.” That’s awesome.
We talked about BPOs and analyzing those.
Can you give a shout out to the company that did our exterior inspections in three to four days? Safeguard Properties, you are the company. I’d say you are the man, but Staci Hannebrink is our rep there. That was one thing that you gave me. I was getting on a boat in Seattle to go see orcas. I hope to see orcas because you can’t plan to meet them. It has to happen. In the little bit of time as we were chugging out of the harbor before we lost cell phone service, I was able to call Safeguard Properties, talk to Staci Hannebrink, ask her if I could send her an Excel spreadsheet of all the addresses and how quickly could they give us exterior inspections. She was like, “I’ll get them for you in three to five days.” Three days for most of them. They only took five days where it was some remote outpost where they had to find somebody who was willing to get out there. That was unbelievable. Staci, we are so grateful and now everyone knows how wonderful you are.
That was a saving grace because a lot of times I know some preservation companies may take a few weeks. We’re closing on this deal in under two weeks, to give people an idea from the timing of everything happening. One of the reasons why it did go so fast is they provide O&E reports. Unfortunately, they were single owner, but the benefit was when we got the collateral, they did already provide reports from a very large company that does collateral reviews. They had reviewed more of the collateral than the actual O&E. With land contracts, the major thing is all the deeds are assigned in order.
That’s the title side. On the land contract side, it’s to make sure that was assigned in order. There were some things with allonges missing, but states handle allonges very differently with land contracts than they do with notes. We worked through a lot of those issues but having all that already pretty much done and then taking that information and sending it to our attorney to still go review, to get a firm understanding of where the assets stood. Kudos to the attorneys we’ve used. I won’t name them right now because there are too many to name and I’ll miss one and forget them. It goes back to you don’t do this after you get started.
We had to build relationships with a lot of these law firms and attorneys and everything else to get an idea for, “Can you get this to me? I sent everything last Monday. Can you get it to me by the end of the week?” The ones in southeastern states were all taken care of by one attorney in the Midwest. I had somebody else in the east. Northeast, I had another. There were a few states that I was like, “I don’t have anybody here.” I reached out and was able to find an attorney or a referral or somebody who was already doing something for me, for example, in Wisconsin. All of a sudden, they will say, “We can do Iowa, this state and that state.” I’m like, “Great, thank you.”
We always talk about having a network and having relationships where you can call an attorney in a semi-hysterical and flustered state because you’ve committed the biggest purchase of your existence in note investing and say to them, “Can you fast track this?” They’re like, “For you, yes.” A lot goes into getting that response from your vendors.
One other thing that I mentioned with this that we’ve not talked about in a sense, but I’m hoping it’s moving in this direction between let’s say Paperstack and these assets coming out is the seller providing the O&E report. Granted, it’s only a single owner and you might want to pull the two-owner one, but at least they’re giving you something that you can look at it. There are some on there that clearly showed a fatal flaw that you couldn’t do and it saved me $135 at least from knowing that I have to deal with that. When you’re looking at 50 assets, there are going to be about five of them that are probably going to get tossed back. When you think about ordering some of these things a few hundred dollars right then and there, $1,000 plus that was saved by them. Plus, as a seller, you’d get a better price on an asset when you’re providing that because some people, I don’t know if they’re lazy, but it’s like a step that, “It’s already provided for me. Now I’m more inclined to bid.” I’m not sure why.
It eliminates that fear of not knowing what’s going to turn up on that report. You and I have both spent money on reports for assets that we didn’t end up buying. In every case, those sellers knew we were going to find the deal-killing piece of information. I don’t know if it’s all sellers, but there’s a lot of wishful thinking in real estate. I’m trying to sell a house right now that’s got a fatal flaw. It’s got a foundation problem. Like anyone else, I have the option of writing a listing for it that doesn’t mention the foundation problem and hoping people will come and they will fall in love with it and they won’t care that there’s a foundation problem. I don’t think that makes sense. It’s better to be upfront, sort people out, to begin with, because otherwise you’re going to have a million people coming who are all going to say the same thing, “I didn’t realize it was a foundation problem.”Do not take down a pool until you’ve got game in terms of your knowledge about it. Click To Tweet
Sellers don’t want people putting things under contract or making indicative bids, going through the process and then falling out because there is some fatal flaw that they weren’t upfront about. I see people bidding on things that I already got a bad O&E report on. The seller will tell me that someone else has got that under contract now after I tossed it back. I want to find those people and give them my own O&E report to like, “Please stop spending money.” That’s why we created the toxic asset list on the Notes and Bolts Facebook group because we see people buying the same reports over and over again. No one’s admitting that this is an unsellable asset.
You’re absolutely correct. I’m glad to see that people are doing it. I think it does save everybody money and I do believe it gets the seller a little more money back as well. Why don’t we talk a little bit about the raising money side of a fund? Maybe some pointers to people or things that you’ve done in the past, Gail or recommendations to do in the future for raising money if you’re going to try and raise whether it’s $200,000, $500,000, $1 million, whatever the magic number is. What are some of the things that you would recommend to people?
This goes along with not trying to do something like this too early in your career and doing a lot of deals before you take on a big pool like this. To me, the biggest thing is when I send out information, I let people know that there is an investing opportunity. I always get the biggest, quickest and most enthusiastic response from people that I’ve already JV’d with. Either I currently have something, I got a deal going on with them or we’ve already exited a deal. Those people have tremendous confidence because they’ve had a good experience with you. They have friends and associates. There’s a tremendous number of people who are contemplating entering a deal with you. Ask people who’ve done deals with you, “What do you think?”
You and I both, when people come to us to say, “I’m thinking of investing. I’m looking at you and I’m looking at someone else. What can you tell me?” I’m like, “I’ll answer any question you have, but if you want to know what it’s like, let me give you the contact information of people who have been JVs with me and they can tell you exactly how it goes.” You ask them any question you want. I’m not going to tell them, “Don’t tell them something.” We are transparent and proud of the reputation that we have and the attitudes, the relationships we have with people that we’ve already done deals with.
It goes back to not starting out and focusing on people who are in your circle. It goes back to what we’ve talked about in episodes about your early deals of putting an indicative bid in and not having marketed it or anybody to sign up for it. You’re right. As you start to do more deals and close out deals and work with people, it gets easier. My two cents that I’ve always managed my businesses or tried to is through communication and trying to over communicate everything with people. It’s making sure that they’ve been informed and be able to make an informed decision and keeping everything very transparent. I’m sharing anything and everything that is available with them so that they have all the available information. They can see everything that pretty much I can see. That’s what I attempt to do.
Answering your phone and returning phone calls, answering emails when investors have questions. Not everybody has that same level of confidence. Some people need to talk to you more often. That’s normal. You should welcome that.
I had an individual call me and was like, “I saw the reports that you sent me. I have some questions. Do you have a few minutes that we can talk about this?” I was like, “Absolutely. Anytime you have a question, feel free. Pick up the phone, give me a call. I’d be happy to answer. I may not always answer but text me. I always try and get back to you.”
Chris has a very long commute in the morning and in the evening. We call that telephone time.
I’ll be honest, if anyone ever wants to get in touch with me, I tell you the best time to call me is either right around 7:15 AM or 7:30 AM or right around 5:00 in the evening. If you try me at 6:00 PM, you’re probably not going to get me because I’m sitting down and having dinner with my family. I know people sometimes try and schedule calls at like 8:00 PM, 9:00 PM on Thursdays. We do the podcast at night, but typically, I put my kids to bed at 8:00 PM. After that, usually I turn the phone on and off and I’ll answer texts or emails and stuff. I usually don’t get into full-fledged phone calls at that point in time.
I’ve been a freelancer for many years, so I’m very used to my home time being the same as my office time. It’s all one thing. I just have time. When my kids were small, absolutely some things are sacred and putting the kids to bed is definitely one of them. You’re incredibly available for someone who’s as busy as you are. No one should complain if they can’t get Chris the first time they call. You got to call him back.
Back to the pool, what other thoughts would you like to share with people? What did you find differently? What advice and lessons so far have you learned about any aspect of it?
Buying a pool is the Olympiad of note buying. If you normally like to spend a lot of time doing careful reviews of things, you have to up your game. You either have to have very good vendor partners, which we do, thankfully. It’s like anything else, even though we have things reviewed by people, we still double-check. We still eyeball everything ourselves. You have to be prepared, and anyone would know this anyway, to spend a lot of time. There are so many pieces to it, the purchase of it, the infrastructure if you’re going to put a fund together to buy a pool. That is something that you have to do ahead of time. There’s no such thing as, “I saw a great tape of assets. I’m going to see if they’ll sell me the whole thing. Let me call a lawyer at the same time about putting a fund together.” You can’t do that. You have to have the intention that, “I don’t know if it’s going to be this year, next year, whatever, but whenever I’m possibly within six months of trying to buy a pool, I’m going to make that attorney call and order that paperwork.”
One thing I’ll mention to it too is it’s something you can also phase, depending on the attorney you use. It’s usually not a lump sum payment right off the bat. It’s done in increments. It might be in four different increments that you can put together and save costs. If it costs $10,000, it might be in $2,500 bundles. It’s not like if they put it down for a month or two that it’s outdated. It’s something that you can do over time. The other component to it that is probably the most important is putting an investor marketing package together. You typically would take information from the fund from it. If you’re doing a 506(c) fund, which allows you also to advertise, you can put a package together that highlights a lot of the analytics that you put together as well as some of the projected returns or if we’re providing a preferred return, the length of the fund, the minimum investment. You can put all that stuff together and get it ready because that takes time as well. That‘s something that you could use somebody on Upwork to make it pretty for you. Put everything together, spend a few hundred dollars and have it, so then once all the legal documentation is done, you’re ready to go with that component as well.
I don’t think in this business or any business, we talk enough about creating the conditions where something great can happen. We all hope for great things to happen in our businesses; growth opportunities, exciting development. It feels at times very random that these things happen. They either happen or they don’t happen, but if you look at the people to whom it seems to consistently happen, you see that most of the time they have not been the beneficiary of some random act of the universe, but they have laid some groundwork where something can happen. You prepare the soil so the flowers can bloom and there’s more volition involved. I want to encourage people to think about the actions that they take and the assumptions they’re making about where they’re going.
If you find that you have low expectations where you’re thinking, “Maybe I’ll be able to buy a couple of notes and maybe eventually in ten years I could be making a living from this.” It’s not that it takes that long. You and I have been very serious known investors. We’ve grown so quickly and some of it has to do with making a decision that we’re going to go big or go home and let’s go. We don’t know when we’re going to use it, but we engaged an attorney months ago start working on a fund paperwork. We had no idea when or how we would use it, how we would roll it out and then these opportunities presented themselves and we were ready so we could do it. I encourage people to think about what they’re doing and the long range plan. You don’t have to have a very articulated plan, but if you think you eventually want to do something, start doing small steps that are going to take you there.
One of the things that I mentioned and do a lot with my business and it’s something that people should think about is investing in your business. I know a lot of people invest in themselves with training or other programs. What sometimes a lot of people get a little hung up on is investing in the business, whether it’s spending money for certain software. I’ll talk Infusionsoft. I was paying $300 a month for Infusionsoft and people are like, “It’s $300 a month.” I can’t tell you how much money that has made my business. Some of the other things that I’ve used or programs that I’ve grown to use that I’ve spent tens of thousands of dollars on software. I know a lot of people probably can’t do that, but I was taking profits that I was making from deals and reinvesting in. I knew I could grow the business to get to a point where if I was going to take down 30 assets at a time, I have the systems in place to do that. That’s the key because it’s not only all about having the funding or the experience or the time, it’s also having the infrastructure around you that I don’t think we talk about enough. That’s another great episode we’ve talked about is the growth path of things to consider. I know people who leave their full-time job and come do notes and so forth.You have to look at everything from a global perspective. Click To Tweet
I’m jealous of those people and I would love to do that, but I also love my full-time job. The thing I always tell people is when you do that, make sure you’re ready. Make sure you have the systems in place that allow you to grow. If you have to spend $5,000 on something, it’s already been budgeted for. It’s not something like, “I don’t have this $5,000,” and you get caught in that pickle of you can’t make that leap because of certain things or you get caught in. I was in this situation a little while ago where I was moving over to a different software system. I’m still in that process where it was expensive. I knew at the time it was way more than what I needed, but knowing where I wanted to get to, it was going to be what I needed. I found that using that earlier rather than later has allowed me now that if I have to make a quick second decision, we pull a trigger on something, I’m already set up to do it. That’s my long-winded rant.
It’s true though. For all of us, when you make some money in this business, you’re always confronted with the decision like, “Do I pay myself and do something fun or pay some bills or do I put it back into the business?” When you do not yet have the big income that we all are dreaming of, it is a tough decision to reinvest in your business. I hope us having this conversation becomes part of people understanding the vision that you can have of, “If I am willing to keep reinvesting at the beginning, where is that going to have to take me in the near term to be able to then make an exponential leap towards my goals? If I don’t spend the money on a vacation, if I put the money into building a piece of infrastructure for my business, then I will very much more quickly be in a position to be able to buy a pool and make that profit rather than continue to do individual deals.”
It’s like an individual deal. You do a note deal, you make money off it. If you reinvest that in a new deal, it’s going to grow and your business grows. If you pull it out to go on a vacation, it’s gone and then you’re starting over. It’s very similar with growing your business. I’m not saying take everything and reinvest it in your business. I’m not dissing vacations and things like that by any way, shape or form. I’m saying you need to think about where you want to go, what you want to do and how much it’s going to cost. That’s one of the things where I’ve provided in the past a one-page business plan that you can fill it out. It has things for each quarter that you update and fill out so you can maintain and stay on track. It’s got things on there, a lot of goals that are definable.
It’s either, “Did you do it or not?” It’s not, “I’m going to be happy.” How do you determine whether or not you’re happy? What is it that determines happy? Is it buying 50 notes? Is it raising $1 million? What is it? That’s what I built that off of and I got it from, I forget which book it is. I’ve given it away, it’s on the Notes and Bolts group too. If people want to go on there, they can get that and download it as well. It’s about planning to get to a certain level and when you get to it, at first, in hindsight being at it, I thought it was scary. It was like, “I’m going to try and do this, do that, and try and pull this.” It’s scary doing it the first time, but whether you’re buying two assets or 25 assets, you go through the same process of analyzing each note and so forth.
The one thing I’ll mention is that when you buy a pool, you’re typically buying the assets at a percent. The seller’s going to come back and say, “We’re going to put these at $0.55.” I’m putting numbers out there. If the total UPB is $1 million, you’re paying $550,000 and each one is at $0.55. There’s going to be some of them in there that may have had a $1,200 balance on it that you’re paying $700 for. Technically, you’re going to lose money on that because by the time we record and do the documentation, there’s no money being made, but you don’t look at it that way.
You have to look at everything from a global perspective because that $100,000 asset that you’re paying $0.55 on a dollar on, that one could be a steal. You got to look at everything as a portfolio and analyze it there and understand that there’s going to be a few of them in there that are probably going to be clunkers. That’s why we want the performing route. We’re going to hold these and pay them to somebody in their IRA later on down the line or whatever it may be. You can’t analyze every single asset and then go back to the seller and be like, “I don’t think this one $0.55, $0.45,” because some of them are $0.65.
You got to look at everything in a big global picture. The perfect example is I’ve got a 401(k). The 401(k) for my work, I put it in a moderate risk plan. I don’t look at every single stock that’s in that moderate risk plan because there are some that have high risk, there are some low risks, there are some that are large-cap, mid-cap, small-cap, international, domestic. It’s a complete mix. I don’t go to MassMutual or Fidelity, whoever runs it and say, “Can you pick out and take out this one and throw an apple or do this?” That’s the bundle performing for you. How you look at a pool is you’re getting these and you’ve got to evaluate, “How much am I going to have to spend on each one? How much I can sell this to somebody down the road?” Some of them you may make $10,000, others you may lose $1,000. Between the two, that $9,000 you made got you a 35% return. You shouldn’t be making 40% on one or 60% on one and nothing on another.
People are familiar with the retail concept of the loss leader items. That’s the hot item that they put on sale because they know you’re going to come in to the store and you’re going to buy a whole bunch of other stuff while you’re there. They’re willing to take a little bit of a loss. It’s probably not a loss, but they’re willing to take less profit on an item in order to get you in there where they can have their way with you in retail.
The last thing I wanted to mention about notes is that whole portfolio. Getting prepared for it like we talked about, I took a class on portfolio management. As people know, I’m getting a master’s degree in real estate finance. I specifically took this class on portfolio management and it was more a lot based on buying a portfolio of different types of real estate, but it can be applied in any situation. It started out as stocks, but then they went into REITs and then they went to actual properties if you’re buying multifamily properties in different classes. It expanded into a varying degree of how to analyze a portfolio.
I look back at them and be like, “That was great class.” I post about people paying $40,000 for training. I made a post about, “You could go get pretty much an MBA,” and so forth. People are like, “Why would you go back to college?” My perspective is whatever you pay for your education, there are people who are going to do what they’re taught and whether they spend $5,000 or $4,000 are going to be successful. There are people who, no matter what they’re taught, I don’t think they may have it in them to continue moving forward. You’re going to have people always on both ends of the spectrum. For me, I went more the collegiate route because of my full-time job, but also things typically are looked at in a much bigger picture when you’re dealing with $100 million portfolio. You can learn a lot more about risk diversity and sensitivity analysis based on things that you can easily apply to things in a smaller realm.
I would like to tell a more folksy story about the idea of preparation. When I was a young married woman, I had a seven-year-old stepson who I adored. His father and I moved into a three-bedroom house. We had a bedroom, our son had a bedroom and the third bedroom was my office. We were trying hard to have a baby. It wasn’t happening as quickly as we wanted it to. I had a realization one day, there were other issues with the house and reasons that we didn’t want to stay in it after four years. I said to my husband one day, “I want to move into a house that has room for my office and a baby.” I feel like I need to have the right setting that’s going to allow something to come into my life. I don’t know if that sounds a little too woo-woo for some people, but I feel like we don’t understand in a way our own sense of readiness for things. Sometimes you have to make some very positive moves that are based on a vision that you have. I have for a long time wanted a house down south where I could spend the winters and get away from these Philadelphia winters that I cannot stand anymore. For several years now when people have asked me what I want as a gift, I will say, “Give me something for my house down south. I’m going to need stuff from my house down south.”
I never had a house down south. It was nowhere in the works, but as you know over the past few years, now I have a house down south. It’s not renovated yet. It’s still underway, but I look back on that. I look back on that and that simple statement of, “Give me something for my house down south. I’m going to need things there, artwork, whatever it was.” It puts something in me, that positivity about having the vision that I would have that, not questioning whether I would have it, but planning that I would have it. It changes something inside of you and you start doing things in a way even unconsciously that take you in that direction. I’m a huge believer in this. It’s not just me. Napoleon Hill in Think and Grow Rich, he is way more woo-woo than anyone ever talks about, but he was a manifestation guy. Have the vision and then live the vision and you will find yourself there eventually because you program your whole being around where you’re going. It’s awesome to realize that these things are all unfolding and happening in a way we dreamed that they would.
I mentioned this to you at the Quest Expo in 2018 where we were at. At that point in time we were getting ready to launch the show. I can’t even recall where we were in our notes space. I felt like I was still a kindergartener in a sense. At the time, I’ve done 40, 50 deals. I was looking at it from, “I’m still a newbie. I’m still trying to learn and trying to meet people.” I felt very awkward still trying to talk to people about the opportunities that were available and raising money and things like that. That was in 2018 and people ask me, “How many notes have you bought?”
“I don’t know anymore.”
With what we’ve got going on, it’s going to be 200 maybe. I lose track in the sense of how many. If you ask me an asset that I own, I could tell you exactly where that asset is, when the borrower last made a payment and where we are if it’s in any type of legal situation. Some have been paid off. I’ve sold a few. Maybe I have 75 active assets. In one of my entities, 45 out of 50 of them had been paying. The ones that don’t, I try and work out deals with them, but if we don’t, then we move forward. I don’t beat around the bush and wait six months or a year and let it sit there before I do something.
You bring up another good point. You and I have pushed each other to do more and be more and I’m very grateful. It’s been super fun. I’m glad people enjoy the show and we’ll keep doing it.
There are two things on that. One is people should find an accountability partner or somebody to bounce ideas off of. It’s well worth it from that sense. You keep people honest and you may end up doing deals with them or whatever it may be, but at least it’s sharing the idea and sharing the vision. Two is I disagree with a little bit what you said because I think I push you, but you do more of the pulling against me on trying to hold me back a little bit from doing things I shouldn’t be doing.
I am the bucket of cold water on your fondest dreams.
Gail is the one who sits by the pool, but she’s five feet away and I have to get somebody to go pick up the chair and throw her in the water to get her to jump in sometimes. I’m like the two-year-old who’s standing on the diving board in the deep end and Gail’s like, “Oh my God, what are you doing?”
I’ve learned a lot about risk-taking from you. It’s been scary for sure, but I look back on myself and things I was afraid to do before. I cannot even recognize that person anymore. Thank you for being such a lunatic and dragging me along.
It’s always a controlled risk. It’s never like shooting from the hip, “Let’s go do this.” Let’s think about this and I’ve already got the plan in place because if we don’t have the plan in place, then it’s like anything. I say that because it’s about being in the comfort zone and everyone always says, “You got to get a little bit out of your comfort zone.” I like to push you a little bit to get you out of that comfort zone and to do things. Trust me, I’m a very simple person where I like to eat the same foods every day and stuff and not go outside the box. It’s sometimes difficult for me to go outside of my comfort zone, but in some of these things like a pool, it’s understanding what the risks are, what are the assets, how are we going to manage it and having that plan already in place. It’s not like we’re just winging it. We’ve got this plan in place. Is it scary doing it the first time? It can be a little nerve-wracking. I used to work with somebody who say, “Stick to the basics. Stick to the blocking and tackling, then things fall into place.”
This is funny because I make fun of you for being so conservative about some things with the multiple belts and suspenders. I’m like the lunatic, but we take turns being the lunatic. Now that we’ve got these big pools to worry about, we are going very much by the book on those. There’s no question about that. Have you said everything you need to say on the subject?
I did sign a closing documents during this episode on a property as well. I did get into some additional.
I signed a purchase agreement for a house I have for sale in Indiana, so there.
I have to sign the HUD-1, the deed and everything. It’s good to go, stick it in the FedEx box and close on Friday.
Thank you everyone for joining us. Hopefully, this has been more organized than it feels like it has been at this moment. What’s the takeaway? The takeaway is lay the groundwork, figure out what your vision is for your future and start putting some pieces in place even if you’re not sure exactly when and how lightning is going to strike
Take it slow and take your time. You don’t need to go from five notes to 500 notes. You don’t need to go out and buy 50 notes on your first deal. I know people that have and they’ve been successful doing it.
I know people who have crashed and burned also. The other thing is Facebook in general where everyone is showing you this curated and amazing life of theirs. There’s an awful lot of bragging in notes. Everyone wants to know how many you’ve done. What have you got? Whatever is the note version of the sock in your pants, there’s definitely some fudging going on. People exaggerate their accomplishments. Don’t worry about what other people are doing. It’s about you and what you want to do, what your goals in life are and how you’re going to get there.
Here’s my example because I work in commercial real estate with that. Go to any major city, look at an apartment building an see if you know who owns that building. The people who truly have a ton of wealth typically, for the most part, are very quiet. That comes all the way down to people who have a few million dollars to invest, which is a ton of money. You usually don’t see them always bragging on Facebook or posting this and that. They’re quiet, very relaxed individuals who go about their way. They’re very methodical. They’ll analyze things and look who maybe who the players are and stuff. At the end of the day, most of them will associate with people who are more like them, who are in the background doing their thing and not trying to make big scenes about things, even when you look at these funds that sell these assets.
All the people who have substantial funds are not the ones who are out there constantly talking on BiggerPockets, constantly talking about themselves on Facebook. They don’t have to. They have it all together.
The only one that sticks out to me that does is Dave Van Horn and he’s got a great reputation and so forth. For the most part, most people want to be quiet and reserved. I throw out some numbers from my business, but it’s the same thing. Typically, I’m very quiet about my businesses and we share our stories here and so forth. I’m not going to sit here and all of a sudden tell you, “I made $10 million this year” or whatever it is. You see some people go, “I bought a multifamily property for $2 million and sold it for $8 million. Woe is me.” Even on my note deals, I don’t advertise or post case studies of all these grand slams or home runs. I’ve already gone through the whole resume thing of how everyone can show you their good deals and stuff.
They often bury their mistakes. People who are doing things are not on Facebook bragging because they’re working on their deals. There‘s a lot going on. We’ll still take breaks and do podcasts, but we’re about to find out what we’re made of.
I’m done for the year. We’ve covered a great deal on this episode. We thank our audience. We do have over 30,000 downloads now. We’re very thankful for everyone. If there’s anything you’d like us to cover on any episodes, please feel free to reach out to us. If you have a moment, we’d appreciate you leaving us a review on iTunes, Stitcher or Google Play. As always, we recommend you go out and do some good deeds. Thank you all.
- Coastline Capital
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- Think and Grow Rich
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