The Anatomy Of A Deal

GDNI 06 | Anatomy Of A Deal

 

Real estate investing can prove to be a good long-term investment if its value increases exponentially over time. You may even use it as a part of your overall strategy to begin building wealth. However, there are so many things to consider when looking at potential note investments. Like any investments, it is far easier to find bad deals than good ones. While the rewards can be very good, the risks can be huge, especially with non-performing notes. These can only be mitigated with solid information and a fair amount of due diligence. Chris and Gail dive deep into the anatomy of a deal, discussing the case history of their best and worst deals ever so you can walk away a little bit wiser about how to handle your future deals.

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The Anatomy Of A Deal

You and I have been working on a little project that I’d like to quickly talk about. We bought a pool of notes at an excellent price and came to find that of the six, four were vacant houses which we didn’t know. I’m saying we didn’t know but we did know because we always send someone over to look first. We knew that four were vacant, but it was such a good deal, we thought, “Let’s buy them anyway.” Now we find ourselves in I don’t know if it’s an enviable or unenviable position of trying to figure out how we’re going to sell four houses that the closest one is probably about 800 miles from either of us. The farthest ones are far. We’re on the East Coast and we’ve got two in Oklahoma. I’m embarrassed to say I don’t know very much about Oklahoma. I was a little surprised to see it’s right above Texas. I thought it was farther.

I know where it is, but I had not invested in Oklahoma prior.

Now, you’re all about Oklahoma but I am geographically challenged because of these exciting deals that we have. I’m learning more about our country and what kind of houses there are out there. The interesting thing is that as we work through these deals, first we figure out what we have and then we figure out what do we want for them. How do we attract buyers and then what do we do? We’re developing a system for how we’re going to do this in the future. We had a breakthrough because one of the big issues that we were trying to solve is if we let people go and look at a house and they’re distressed houses, you don’t want to let people in because there could be some hazards in there.

We started out by creating a waiver for people to sign and we did everything electronically. We have everything now where people can click on a link to get information on the property. They’ll fill out a waiver and then once they fill out the waiver, they will get sent more information about the property including the address, the open house times because we’ll be having an open house. We’ve also got the properties listed either as a cash sale or seller financing because we were able to buy these at a heavy discount. We have some room with them where we can offer to a fix and flipper or some other type of contractor possibly who may want to get that property to live in it. To basically get some financing through us versus having to deal with the banks because when we’re dealing with banks on properties that are sub $50,000, it can be very challenging to find financing.

Even if they were in better shape. I’m impressed by what happened and it’s worth giving the details. First, I found people to be the doorman. To go to these properties, open them up for people, and let the people in. Then our next question was, they have to sign waivers because we don’t know what’s inside these houses. My thought was I’m going to have to print up these waivers and I’m going to mail it to them in time that doesn’t get them for the weekend. This was already Wednesday so we thought we’ve got to figure this out. I thought maybe these Craigslist people, even though not that many people have printers anymore, maybe they still have printers. I can email the waiver to them almost at the last minute and they can still print them out and take them to the house. It turns out that in one of the houses 100 people have inquired about it.

I’m picturing this guy at the door trying to swat people away and get them to sign these things and meanwhile, they’re trampling him like Black Friday at Walmart. They got two PlayStations in the back. I thought I was musing about it out loud. It was like, “What if we sent them the waiver ahead of time,” and then you said, “What if we put it up online?” I said, “People don’t have printers. How are they going to print them out and stuff?” Then you said, “We could put up a form and they could fill it in. They don’t even have to print it.” It got cooler and cooler from that point on, the idea got sleeker and better. I want to keep taking notes about what we did so that I’ll never forget the recipe. I’m excited because it’s making me feel freer to buy these properties if we can figure out a way to sell them easily.

I agree and the automation in any business nowadays is imperative to allow you to work on your business versus in your business. With the advent of the internet, one of the questions I was going to ask or post to you when you were telling your story, because people probably have this right off through their head, is where did you find people to come to look at the property and also where did we find the doorman or how did you find the doorman?

I don’t know if you have the same experience. We all use Craigslist to find people to do things and that was the case with the two doormen. You always get a lot of responses. The real art of that is how you figure out who to entrust. When it comes to finding prospective buyers, I also put both houses up on Craigslist and I put them up on Facebook Marketplace. I probably have gotten on each of these two houses maybe three responses on Craigslist. On Facebook Marketplace, you can argue that they make it too easy to respond because you don’t even have to write a message. I get tons of replies that are like, “Good evening. Is this available?” Which must be a button you hit on Facebook, like respond to this or something that says, “I’m interested in this item.” They seem like they’re automated, but the fact is on the one house in Oklahoma, I’ve gotten over 100 inquiries on it. I’m hoping that this translates into a big sale price on these things. Facebook smokes Craigslist when it comes to selling something. There’s no comparison.

One question too. Did you put pictures of the insides on Facebook or any of these on Craigslist?

I selected very carefully which pictures of the inside. I don’t want to scare people away. I was very honest about the fact that you can’t just buy these and think you’re going to move in and work on them while you’re living there. These are not livable houses. I don’t know that there’s anything dangerous but certainly, they’re going to need a lot of rehab to even be functional. I did my best to discourage people to say, “If you’re somebody with a small down payment thinking like, ‘Here’s a chance to buy a house and have a low payment and not need much money to get into it,’ don’t think that way because you are going to need a bunch of money to make it nice enough to be habitable.”

The automation in any business nowadays is imperative to allow you to work on your business versus in your business. Click To Tweet

I have a property that I have listed in Maryland. It had water damage on the first floor where they started renovating and there’s no sheetrock on the first floor. It’s down to the studs and they started the plumbing and electrical. I posted that with photos and offered the cash or seller financing. People would reply back, “I’m interested. I need a place to live ASAP.” I replied back, “Have you looked at the pictures? This place is not livable in its current condition.” They typically don’t respond or sometimes they will ask, “How much work is required?”

I love getting that and I’m like, “I’m in Philadelphia and the house is in Oklahoma. I have no idea. I will open the door to you. You can go and look.” I got the same thing. I got a mom who was like, “I need a place for me and my kids.” I was like, “I hope you’ve got a few months like a family full of contractors because that’s what you would need for this to be your house.”

I got an email from the individual who took pictures of the property we have in Ohio as part of this group. He claims to be a wholesaler and said, “I’ve got some questions.” I said, “What are your questions?” He was like, “What work is required on the property?” I chuckled and replied back, I said, “This is funny because you’re the one that’s been in the property and taking the pictures for me and seen what the property looks like. I’m 500, 600 miles away. I was the lender on the deal. I’ve never stepped foot in the property, so I don’t know what’s needed but I would think having you’ve been visiting this property you may have a better idea.”

Was he having an amnesia or he blacked out after the shock of the condition of the house, he couldn’t remember it?

It’s probably one of these individuals who is trying to get into real estate and trying to claim to be a wholesaler. I don’t think he has a good understanding of what the process is or how it works.

This is one of my observations. This is unfair but when I get responses for beat-up houses that needs everything, I get a response from a cute girl named Heather who looks like she’s 21 years old. I tend to discount that and maybe I shouldn’t. It could be unfair, but you have to get the Heathers out of the way very quickly.

GDNI 06 | Anatomy Of A Deal
Anatomy Of A Deal: You feel freer to buy properties if you can figure out a way to sell them easily.

 

I would dispute that because I’ve got a partner in North Carolina who’s a realtor and a contractor. She is a pit bull when it comes to renovating and getting houses ready. She is on top of everything and she is extremely good at what she does. I’ve done two deals with her and they’ve worked out great because I’ve either purchased them like these six that we’ve bought. Then turn around and seller finance it to her or some other contract for deeds where I ended up taking the property back from the borrower.

I wasn’t insulting all women, young women. If you have a major Instagram account where you post several times a day with makeup tips and what you’re wearing tonight, I don’t think you’re my buyer. I hate to generalize, but sometimes you have to.

On those, we are planning on having open houses this weekend to see how those turned out.

We should promise right now that if we come up with a great recipe here, we will share it on a future show and we will tell any excruciating detail everything that we did.

One should have a good understanding of what the process is or how it works. Click To Tweet

We’ll give everyone updates on how we made out with these properties one way or the other. It’s interesting to share these stories with people.

With no further ado, let’s talk about why we’re here. We are here to talk about the anatomy of a deal. My thought before we wasted all this time jabbering on about the vacant houses was, we should do a show called The Agony and the Ecstasy. Where we give a case history of our best deal ever and our worst deal ever. At first, you asked me to contribute deals that I’ve done. Ever since I started as a note investor, my goal was always to buy houses, to buy loans where I thought the borrower would reinstate. That has pretty much happened until these silly vacant houses I bought with you. For the most part, I’ve bought loans and most of them have reinstated. Some people have fallen off the wagon again after reinstating. Some I’ve never gotten them to reinstate. All in all, I don’t have completed stories where we know the ending yet. You have a lot because from the beginning you have been willing and enthused about buying things that were already careening towards a conclusion. They were already in foreclosure or they were going to go to foreclosure. Do you want to tell us about that? Start with one of your favorite ones and let’s see if it’s an agony or an ecstasy.

This one will cover a little bit of both because of the story behind it. This was a non-performing note that I had acquired back in July of 2017. During the initial process, what happens is you get a tape which is a list of assets. The seller allows you to typically cherry pick, which is you don’t have to bid on every single asset, you can bid on one or multiple. In this tape, I bid on two or three assets. I had this asset in Georgia at the time that got accepted. The numbers behind it where the house was on the seller’s tape had a value of about $35,000. The borrower had made eight payments in the last twelve months. The borrower wasn’t completely not paying. They were making a decent amount of payments and the payments were around $600 a month but they weren’t making twelve consecutive payments.

GDNI 06 | Anatomy Of A Deal
Anatomy Of A Deal: When it comes to finding prospective buyers, you can put houses up on Craigslist and on Facebook Marketplace.

 

What town in Georgia was this?

This was in a rural area of Georgia called Unadilla.

I love it already. Who wouldn’t want to live in Unadilla? There’s an asset that keeps coming around with an asset in Georgia in a town called Talking Rock. I swear I want to go there because if the rocks are talking, I want to have that conversation.

I believe there are two at one time. I had one under the agreement.

In Talking Rock?

Yes.

Didn’t you buy it?

No, when I had the BPO done, the numbers didn’t line up with what the seller’s BPO match. When I sent them the BPO, they would not move on the price.

When people are from a small town, they don't like to move because they don't want to be the talk of the town. Click To Tweet

A seller overvaluing a property. That’s like seeing a pink elephant. It almost never happens.

Which happens in this case, but here is where the pink elephant comes into play.

Was this a CFD or a note?

It was a first position note. A lot of people will follow the stair-step method of bidding, which is if the asset has a value in the $35,000 range, you’ll bid around 35%. With it being in Georgia, a fast foreclosure state and the property borrower having made eight payments of $600. I did go up a little bit. Our initial bid was at 50%, which was $17,500 and that got accepted. Once it gets accepted you start with your due diligence period. The first two things you do is order a title report. I get them from ProTitleUSA.com. I also get a BPO or a broker price opinion, which is a realtor drive by a property, takes some photos and tells you what the property is worth.

Let me ask you something else to give credit where it’s due. Is the stair-step method Scott Carson’s invention or did Scott teach us that?

I don’t know if Scott invented it. That’s where I learned it from. That’s where I’ve seen he talked the most about it.

We’re both Scott Carson people and Scott is the puppet master. Everything we know and do is pretty much what Scott told us.

GDNI 06 | Anatomy Of A Deal
Anatomy Of A Deal: Distressed properties are not livable. They’re going to need a lot of rehab to even be basically functional.

 

It’s a guide. It’s not written or etched in stone. I’ve got a fancy calculator where I try and target a minimum of a 30% return on my deals.

You’re not doing 50% of the unpaid balance, you’re doing whatever number gives you the return of 30%.

What was interesting too on this loan was the unpaid balance was over $75,000. This borrower was extremely upside down. The house is worth $35,000, they owed $75,000 but it being a small town. We talked about this before, I’m from a small town. When people are from a small town, they don’t like to move, they don’t want to move, and they don’t want to be the talk of the town. I thought the borrower would want to try and reinstate. When I started doing my due diligence, I got the collateral file from the seller which included the service and comments and the borrower was trying to work on a plan. The borrower clearly wanted to stay in the property. The borrower was very active on social media, so I could find the borrower on Facebook, on Twitter, on Instagram posting all the time. Basically, pitching photos of themselves on their way to work. Unadilla being a small town does have a hospital nearby and a prison, which does have a high number of employees in the area. Unemployment has always stayed pretty consistent. There were still jobs and consistent jobs in the area. The O&E report came back clean. There were no issues there. My BPO came back at $25,000 and the sellers were $35,000. Typically, what you do in this case is what’s called fade your bid. I went back to the seller and said, “My BPO came back at $25,000. This is what the property’s worth and I would fade my bid down to $12,500 from $17,500.” How often, Gail, have you had a bid when you fade it to get accepted?

When you market things out, highlight the strengths of the opportunity but also highlight the weaknesses. Click To Tweet

As you were saying that, I was trying to remember if that has ever happened to me. It seems like sellers, as soon as you give them that larger number it’s written in stone. They do not want to back off of it at all no matter what you tell them. You could show them there’s $80,000 in liens they’d still be like, “We think it’s worth it.”

I sent this into the seller and hopefully, we get their tape. They came back and said, “We agree with your BPO and we’ll accept your revised number.” I did not expect that to happen. They accepted the fade on the bid and went through the process and ended up closing on this deal. I did get a joint venture partner on this deal. The way I marketed it out to people is I highlight the strengths of the opportunity, but I also highlight the weaknesses. I’ll tell people, “It’s Georgia. It’s a fast foreclosure state. It doesn’t cost a lot to foreclose. If we’re in it for $12,500 and we do have to spend $3,000 to $4,000 to foreclose, you can foreclose in about 60 days in Georgia. You’re in it for $15,000, $16,000, $17,000, if you’re still getting in the low $20,000 for the property, you’re still at a decent 30% to 40% return.” The numbers don’t look as large in the thousands but from a return perspective, it was still a decent risk profile that I looked at. I found a foreclosure partner that I had worked with in the past who was interested in it. Fast forward to we get the loan boarded and we start doing the borrower reach out. Madison Management was my servicer on this loan. Typically, there are usually three types of borrowers. Those who never return a phone call, those who answer the phone and tell you, “Yes, the check is in the mail. Let me think about it, I’ll get back to you,” and those who reply and answer the phone and speak to the servicer.

In this instance, they fell into the category that they would pick up the phone and answer and try to work something out. We end up doing what’s called a forbearance plan with the borrower. A forbearance plan is a temporary halt to foreclosing on the property, so the borrower was well behind overall payments, let’s say two years of payments. In a forbearance plan, you work with them to say, “If you can make twelve consecutive payments, we’ll take all the back payments that are due and roll it into a loan modification.” The borrower was very quick to sign a forbearance plan and send in the check for the $600 and start on their way. One little tip I tell people is a forbearance plan leads to a loan modification but don’t have your attorney draft a loan modification at the same time because they’ll charge you for it. In many instances, you may not get to the end of the forbearance plan. You may have paid $300, $400, $500 for an attorney to draft a loan modification that you’ll never ever need.

Once you have one loan modification document, have you ever paid for another one or do you keep using it over and over again?

I’ve paid for others because of the state. I want to make sure that I have proper modification from each state. If I have one in Indiana, then I’ll continue to use that same one in Indiana. I won’t take one that I’ve used in Indiana and use it in North Carolina. I want to make sure there’s no quirky law in one state that you need to include language in a loan mod that might be different from another. On this note, the borrower was making their payments. All of a sudden, the borrower stopped making their payments and the borrower disappeared. This was right around the time frame of we bought it in July and late August had the forbearance signed. Then they made the September payment then in October, no payment. The servicer was trying to reach out. They couldn’t reach out to them. November rolled around and still nothing. I had the attorney in December send out the demand letter and start the foreclosure process. When they say Georgia is fast, I was like, “Wow.” We had sent the information on December 1st, the foreclosure date was February 6th. Throughout December and the holidays, the servicer was trying to reach out to the borrower. The borrower was still posting on Facebook, hitting all the Christmas parties, and living life, loving life, and so forth but wasn’t replying. Lo and behold, can you guess what day the borrower finally picks up and makes a phone call?

GDNI 06 | Anatomy Of A Deal
Anatomy Of A Deal: Always have a realtor drive by a property, take some photos, and tell you what the property is worth.

 

The absolute last minute he possibly could.

The day before the foreclosure sale. They called Madison and said, “I can’t foreclose, please don’t foreclose. I’ll send in a payment and I’ll start paying again. I’ll pay more per month, whatever I need to do.”

What did you say?

This was my first foreclosure. I’m thinking I hate throwing people out of their house. I don’t want to throw anybody out of their house, but this borrower also completely went dark on us.

How do you explain someone behaving that way? It’s easy to explain someone begging at the last minute but how do you explain they ignoring you before that?

You try and help people as much as you can but at the end of the day, it's up to them. Click To Tweet

They couldn’t, especially when you could see that they are on social media. I told the servicer that they would need to come up with $5,000 for me to stop the foreclosure because I was already in foreclosure for about $2,700. If I only accepted a payment of $600 or $1,200 and I had to foreclose again, it didn’t make sense.

Would you have to start all over again or could you pause it, not call it off completely?

You could pause it, but a lot of the cost is in the publication. You’d have to re-publicize everything. I spoke to the attorney and I told the attorney, “I am wrangling over this one because we had the holidays, it’s a new year. I don’t want to do this.” I was like, “What’s your experience with this?” She said, “Over 90% of the time, people who have the borrower give them some forgiveness when they don’t come up with a considerable amount of money, end up within the next 120 days right back in the same place.” I went back to the servicer and said, “Let them know that I’m proceeding. I would give them the opportunity if it doesn’t sell it to the foreclosure sale and attempt to try and buy back the property.”

What would that mean exactly?

If the foreclosure sale at the time we were all in with everything for about $17,500, $17,000 at the time. I bid $23,500 at auction which would still get me my 30%. Also, it was right around what the BPO value was and it didn’t sell at auction. I ended up taking title to the property and during this process, I had hired a local real estate agent to work with. I was allowing the borrower to stay in the property until we disposed some way of the property.

I have never heard of that. That was a nice thing to do. That was a generous and kind thing to do.

The reason why was I had worked out a deal. Instead of offering them cash for keys, I offered them to stay there for 90 days free rent. They could save some money for a new place if they needed to or if somebody acquired this to give a deposit to rent or however it works out. Also, I’d rather have somebody in the property than have it vacant.

GDNI 06 | Anatomy Of A Deal
Anatomy Of A Deal: The stair-step method is a guide. It’s not written etched in stone.

 

When we offer cash for keys, although maybe you give them a little bit out front, mainly you hold back most of it until they move out. They have to leave the room swept and in good condition. When that is verified, only then do they get the money. Here, these people are getting the value while they’re there. Were you concerned that they might trash the place on their way out?

No, because we were in conversations with her about having her mother buy the property. I wasn’t concerned. It was a single woman and her son who. She wasn’t in her 20s, she was probably in her late 40s. I didn’t envision her as a type that would trash a property. We were working with her. We were saying, “We’re not going to throw you out the next day. We’ll let you stay. We know how this can affect individuals and it’s a shock on them. I was trying to sell the positives to her that now she isn’t $75,000 in debt. She can start clean. She can start whole and try and work with somebody to buy the property. I had the realtor who was local to the area list the property for $30,000 or $35,000 with owner financing. I had an offer from an investor who was going to keep the borrower in the property. They were going to offer $30,000 owner finance but they only want to put $1,000 down. We were going back and forth on that, while at the same time I was trying to work with the mother on selling the property to her. Unfortunately, with Dodd-Frank and a lot of the regulations, they didn’t qualify based on income requirements because the mother was on Social Security. She had a mortgage on another house, and the daughter who was there had switched jobs. It was very difficult for them to come up with a meeting that requirement. It was one of those things that I was still trying to work how to keep this borrower in the property. I was telling people, “There’s somebody in the property now who wants to stay. I’d prefer to sell it to someone who wanted to keep the borrower in there.”

What happened?

Sometimes it is the best for some people to move on and get out of the debt that they're in and try and start over. Click To Tweet

Here’s a little twist. I get a call from the realtor. The realtor says, “What’s the lowest you’ll go on this thing?” I said, “If it’s cash, $25,000 is the lowest I go.” The realtor says, “Let me get back to you.” The realtor calls me the next day and was like, “My husband and I are thinking of buying it.” It was such a conflict of interest. She was like, “I’ll give you $25,000 for it.”

Do you need to pay her commission on top of that?

I ended up saying, “No, I can’t.” I said, “If I wasn’t paying commissions, then yes I would.” We ended up having two offers. We had an offer of the $30,000, a ten-year note, 10% interest with $1,000 down but then I had an offer of $26,000 all cash from somebody else. What would you do?

I guess in these cases, we always talk to the JV about what they want to do because it’s their money. In a joint venture, it has to be a collaboration. I’ll take the chicken’s way out and I’ll ask the JV what they want to do. What did you do?

I ran it by the JV, but we took the cash. The reason why we took the cash even though the owner finance option was more money, when you look at the velocity of money within the deal, getting your money out of the deal versus having the payments when we’ve already got money invested. The return of getting your velocity back ended up being a much higher return, which my partner in a deal got little over 20% back. It was a deal above average but not a grand slam or a home run. It was something that ended up being a win-win because the individual who did buy the property did keep the former borrower in the property as a rental.

GDNI 06 | Anatomy Of A Deal
Anatomy Of A Deal: Be upfront with the borrowers to tell them what their options are.

 

Hopefully, that person had mended their ways and is now paying regularly. When you’re in there as a tenant, you don’t have all the safeguards that are going to protect you. If you don’t pay the rent, you’re pretty much out of there.

For this one, it was one of the tougher notes because it wasn’t cut-and-dried what to do. A lot of decisions had to be made throughout the process. Starting from going back to the seller, to try and lower the price, to foreclosure which is a very difficult decision to make. Then deciding who to sell it to. I was trying to find a way to sell it to the mother but unfortunately, the numbers did not allow it.

Did you ever have those, “I don’t know if you’re too old to have had this and your son is too young?” Do you have to choose your own adventure where the story that’s written, where you come to certain forks in the road and you have to decide, “Do I go this way or do I go that way?” Then the book continues. There are two different stories depending on what you pick.

Yes, when I was growing up, I loved math and hated reading. My third-grade teacher ended up getting a Choose Your Own Adventure Sports Book. I read that thing and then she was like, “This kid will read.” My parents got me some. It’s funny because my son takes after his father and isn’t the biggest reader. We got him something with Danny or Dan when he’s Choose Your Own Adventure books and it’s the nine stories in one. Every night for school he has to read twenty minutes and he pulls out that book and chooses a different path every night. For Christmas, he’s asking for more of these books. I mentioned that to my mother and unfortunately, we’re probably going to end up with about 400 of them because my mother is obsessive-compulsive and can never buy one of anything. Those books are interesting, and I enjoy them because they’re decent books to have. They’re intriguing and they’re not reading a book. It’s like, “I get to make a decision.” The note journey is very similar.

That’s why you’re a note investor because you’re living it now, choose your own adventure, Chris. That sounded like a deal that required a lot of work. It was not a giant payoff, but it was decent. It was a good day at work for you. Speaking of gifted teaching, you did mention a tip.

It was in regard to a forbearance plan working into a loan mod and not doing them both at the same time because I did do that on this one. I had the forbearance plan and loan mod created at the same time. Afterward, I realized that we never made it and I was like, “Why did I do this?” They were like, “It’s a good question.”

If you have faith that the person was committed, that they would go all the way because that’s how some people are but unfortunately not all the time with borrowers. I have a contract for deed in Flint where it’s a very similar thing. The borrower put up a pretty significant amount of money to be on a forbearance plan, to earn the right to be on a forbearance plan. That was in August. She paid in September and October and that was it. It was almost exactly the same pattern that you had with this note. It’s sad to say, this is the first person where I knew the borrower. I worked with her, and we have each other cell phone numbers, we’ve talked. I know a lot about her personally. She made a token of effort in the spring to get back on track, but by June it became totally obvious that she went dark too. She stopped talking. I’m always confounded and pretty disappointed when somebody that you’ve spoken to and had a real human exchange with stops talking and leaves you hanging and wondering. It had to be clear to her that I genuinely wanted to help her. I don’t know why she didn’t feel like she could say to me, “I can’t do it. I’m not going to do it.”

It’s tough because you try and help people as much as you can but at the end of the day, it’s up to them. You can only do so much to help them and continue to try and work with them. There comes a point in time where they have to help themselves because you can’t help them anymore. Sometimes it is the best for some people to move on and get out of the debt that they’re in and try and start over.

It’s worse when you’re a parent and you have a lifelong commitment to coaching people, working with them, and getting them over the top. Then you realized I’m not related to this person and I can’t interfere in their lives to the extent that I can with my own little people.

It’s like a note we’re working right now, I won’t give too much information on it because it’s still active, but we reached out to a borrower. It’s a deal Gail and I have going on right now. They’re at least a year behind in payments and we gave them the option of trying to reinstate providing a down payment or walking away. We’ve explained to them the process between and what the options were but also telling them, “We don’t want you to come pay us $2,000 next week only to have you fail in three months because that $2,000 you could have put towards another bill or another place to live.” There are other ways we try and help in situations like that and be upfront with the borrowers to tell them what their options are. That’s one of the things that differentiates us from probably institutional investors as well as even some other note investors.

It is a lot easier when the house is vacant, and people have got themselves set up somewhere else and they’re probably emotionally divorced from the house. In this particular situation, the person wasn’t living there but has now come back and is clinging to it like a rock while the waves pound on him. We made him a generous offer in getting money to get him started somewhere else. Even in the servicing note, this guy has tried to get rid of this house several times. He’s got a real love-hate relationship with it but he needs to pick. He’s got to commit to something and that is either staying and making it work or he is going.

We’ve offered him a very nice package in the sense to walk away from the property. In the sense of giving him options that we’re not going to go after him for any debt. We’ve given him a little time to move out of the property. It’s something that we’re trying to work with him on, but also to try and steer in a certain direction as well.

We’re giving him a month and a half to live there because he doesn’t know where he’s going to go. That’s most people with average coping skills can figure out something, hopefully. It has been lovely spending this time with you, Chris. I enjoyed hearing very much about Unadilla, Georgia and the fine folks that live there. The happy villagers and the time you spent with them.

The people down there including the real estate investors I talked with and everything, everyone was very friendly.

I love the South. I love small towns. The more I do this the more I realize I’m an idiot to live in a Northeastern city. I take more abuse on a daily basis than any of these places have in a month. I’m dreaming of moving to a little town like Unadilla, maybe that house will be available when I’m ready.

I joked because I told my wife the rumors of Amazon coming to Northern Virginia, which is about seven miles from my house.

Making your commute ten times worse than it is now.

It would make my wife’s much worse but mine wouldn’t be too affected because I can’t go any slower than five miles an hour anyway. Housing prices would be good that my house would go up but the traffic and lifestyle would probably be burdened a little bit. Living in a small town with about twenty acres and being out and about and living a peaceful life is something hopefully in the future I can enjoy.

I have a house in Oklahoma I’d like to show you.

That’s only two acres, not twenty.

It’s been lovely chatting. We’ll do it again soon. Thank you so much. For my part, all of you our friends and family, go out there and do some good deeds.

Take care everyone. Thank you.

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