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The Florida Note Investing Scene With Jamie Bateman And Erin Quinn

GDNI 107 | Note Investing In Florida

 

There are plenty of stories about investors having difficulty with note investing in Florida, but you’ll see that there’s plenty to look forward to there. Florida is a diverse environment that deserves at least a second glance because there’s so much value to be found, especially if you’re looking in the right places. Going solo, Chris Seveney is joined by Jamie Bateman, a Managing Member at Labrador Lending, LLC, and Erin Quinn, a Partner at Bowen Quinn, P.A. Chris, Jamie, and Erin go through the pros and cons of note investing in Florida. Don’t pass up this chance to learn more about the thriving note investing scene in Florida!

Listen to the podcast here:

The Florida Note Investing Scene With Jamie Bateman And Erin Quinn

We are going to be talking about doing a case study and I’ve got two special guests with us. Jamie Bateman from Labrador Lending and Erin Quinn, a rock star attorney out of the southeast. Erin, Jamie, how are you?

I’m doing well, Chris. Thanks for having us.

I can’t complain. Another day in the life.

Erin, ladies first. I’ll let you do an intro about you, your company, and what you do.

I’ve been a real estate attorney for several years. I started out in the industry in 2002 as a legal assistant. I opened my own firm after opening several large firms and helping them grow. My actual firm Bowen Quinn opened for business in June of 2018 and I handle creditors’ rights on the foreclosure and bankruptcy side in both Florida and Georgia. Smaller investors are mainly my clients. I have a couple of institutional lenders but most of my time is spent in private lending with people like yourselves. That’s a brief history of Bowen Quinn and myself.

What states are you licensed in?

Florida and Georgia. Both federally and at the state level.

There are two complete opposites in regards to foreclosure and you’ve got Georgia which is fast and furious. You’ve also got Florida which is judicial. It’s the complete opposite. We’ve got Jamie on, who’s going to now talk about his Florida case study. Jamie, why don’t you share a little bit about yourself? You’ve been on the show in the past, but for those who haven’t heard you.

As far as real estate notes go, I have been an active real estate investor for years but got serious about it in 2014, 2015. My wife and I have a small portfolio of rental properties in Maryland, which is where we live. Essentially, all townhouses and one condo. In 2015, I got serious and started treating real estate like a business and started pivoting over to notes. We haven’t sold any rental properties, but I really like the way they work together. I like real estate investing. I still work part-time for the Department of Defense, but that allows me extra time to focus on this stuff.

You’re going to expand your rental portfolio with Cecil County acquisition, right?

Yes, but possibly. That’s a little bit about me.

Are you prior military?

The note investing world is very tight-knit. Click To Tweet

Yes.

What branch?

I was an army officer. I was technically in the Reserves the whole time that I was in, but did about four years of active duty time within that Reserves time, and was in Iraq for a year and that was able to help me pivot over to my civilian job. That was a good experience. I’ve been in multiple leadership and management positions over the years. Thankfully, in my “real job” I’m no longer responsible for anyone else.

Jamie, you’ve got an interesting case study because you’ve had an asset in Florida that you acquired and we’ve got Erin on to talk about some of the legal processes that went through. It was a foreclosure that ended up not going through the full process and ended up getting a deed in lieu. I want to talk about that exit strategy because it’s something a lot of people hear about, but you don’t typically see it too often. You took it to the next step and turned it into a rental as well. It’s interesting to hear how that went because I’ve tried that in many instances and never been able to get it accomplished. More primarily because that renovation aspect of it has always been the killer for me in trying to find a decent contractor to renovate something. I’m really interested and curious to see how you got it done and how you don’t have a full head of gray hair.

I’ll try to gloss over some of the details of this whole process, but for us, it started late April 2019. We purchased a note for $46,500. We purchased it through Paperstac. You and I have a JV deal together, but I had a few other performing notes, but that was really it. This was the first nonperforming note in the true sense of the term.

When you did your due diligence, what were the UPB and BPO values and stuff on that?

The UPB was $93,600, but the total payoff was much higher. $132,000 approximately is what they actually owed. Not that I factor that in too much ever, but it’s there. The property value was right around that as well. Probably $125,000 to $135,000. Right around the total payoff.

You’re getting $0.50 on the dollar roughly in Florida, which is a good price.

I thought it was decent. It turns out the note investing world is very tight-knit. I’d already agreed to close at that price, but I actually learned during the process that the note seller would have taken $40,000. You don’t know that going into it so I still feel we didn’t overpay, but in that sense, it would have been nice to save $65,000. It was a decent price. The loan was already boarded with Madison so I kept it there.

In the beginning, you’re waiting for a month or six weeks to get everything situated. It’s probably a little quicker since it was already with that servicer. In July, the borrower said she was planning to refinance. Now I know, and I didn’t necessarily believe it at the time, but I was certainly hopeful that she and 4 or 5 others were going to refinance and whatever. Ultimately, that was a stall tactic, I’m assuming. Maybe she tried, I’m not sure. There hasn’t been any contact with the borrower since October 2018. Very limited, if any, between her and the servicer. In July, she said she’s going to refinance. That never materializes. In August, she totally went completely dark, no contact whatsoever. That’s when I reached out to Erin because we weren’t getting anywhere trying to work with a borrower. My plan at that point was to move forward with the foreclosure.

Erin, in Florida, I’m guessing the steps are pretty much the same in most states, but can you walk us through what the process or the steps you take for people who haven’t been through this? I know we get a lot of readers who avoid foreclosures or try not to go through them.

Florida, a lot of people hear bad things about it because of the length of the state and how long it takes to foreclose and the fact that it does have to go through judicially. The biggest aspect of delays on the front end that I see when the file comes in the door is breaks in the assignment, allonge chains, and breaks in the pay history. The biggest thing in Florida, being that as an original doc states that it does go through the judicial process of having that paperwork in order. Many servicers are getting to the point where they’re starting to rectify those things on the front end, at least at the bigger financial institution level or those that are handling mid to large-sized portfolios. They do all of their rectification at the beginning before we get the file.

GDNI 107 | Note Investing In Florida
Note Investing In Florida: When note investing in Florida, ideally, having the full payment history is preferred because that goes directly to your damages.

 

That said, every time we get a new referral the very first pieces that we need to figure out from an investor, especially at the mid-size to smaller investor level is going to be, “Do they have an allonge chain completed?” “Are there any irregularities?” “Do they have an assignment chain completed?” “What are the irregularities?” After that, making sure if the client wants us to immediately send a breach letter. “Do they want us to immediately order a title search?” All of these things involve smaller fees and costs on the front of the action that can add up. Each individual lender or investor is going to be different from how they want it handled.

I’ve got some that provide me their own title. I’m supposed to use their title to proceed. I’ve got some that want me to order it, which I prefer to do because I use Florida companies that know the laws here specifically rather than a big nationwide chain that does due diligence title or something similar like that. Some servicers want to send the breach letter. Some servicers want the attorney to send the breach letter. We look at statute of limitations. Are we close to a maturity date on the mortgage? That’s also a concern, making sure that we filed timely. There’s a lot on the front end for us and the fee structure for Fannie Mae that my office and most of the firms follow has a lot of front-end heavy fees and costs. That’s because the majority of the work happens at the beginning of the action. All of that stuff, in the beginning, making sure that you’re set when you file suit is extremely important. That was one of the issues that we had with this specific case. We’re happy that it ended in a deed in lieu because of the issues that we were not necessarily able to rectify on the front-end that we were trying to get done before we filed suit.

I’ve heard of this in Florida, about the pay history. From what I hear, from the beginning of time, you need the pay history. A lot of the stuff that Main Street investors buy, it’s been serviced by these parties and as it gets transferred, those loans originated in 2007 and 2008 that they’ve gone delinquent in 2017. Trying to get pay history from the beginning of time is almost impossible. Can you explain what the requirement is for that? Does it have to be like the beginning of time or just from the beginning of the default and what happens if you don’t have that information?

Ideally, a full payment history is preferred. The reason is that that goes directly to your damages. It goes to whether or not the borrower defaulted. The payment history shows when the last payment on the loan was. In Florida, it is not 100% required. You’ll never recover if you don’t have a full payment history, but it becomes more difficult to foreclose if you don’t get that full payment history. We haven’t had too much of a problem with it in my cases because even the files become contested. Many of them end in modification or end in consents to final judgment without having to actually go through the contested trial aspect of things, which is when that payment history is going to matter.

On the front-end, it’s not super important that we have it before we file suit, but it is good for the investor to know that that’s a potential roadblock so that they are aware of that when they’re doing any kind of loss mitigation. They can also work on it while we’re proceeding through the file to see if we can get as much as we can. There have been times where I’ve just gone on LinkedIn, like I had a missing baby payment history on a loan and I reached out to somebody that I knew and would say, “Do you guys have this? I need to see what you had.” There are ways to rectify that. If I was going to say an order of what is the best-case scenario, it would be the life of loan payment history. Your next best-case scenario is at least prior to the default so that you show the loan was current. Besides those, the stoppage of payments.

If you don’t have that information, it is going to be an uphill battle. That said, there are some cases in Florida that established the practice of prior service or histories, which means there’s a boarding process within your organization that essentially makes the data reliable. The whole purpose of the prior service or documents is because of the reliability of corporate records. Florida looks at business records as hearsay. You are looking at a payment history entered by SN. SN has its process in place. You didn’t physically receive that payment. SN received the payment so you don’t have any personal knowledge as to the receipt of that payment. All you have is somebody reporting at the personal knowledge level, into a system that logs that information.

Florida looks for, essentially, the business records exception to the hearsay rule, which means that it’s made at or near the time of the transaction. The entry into the system is made at or near the time of the transaction by a person with knowledge, which means the person putting in the payment, physically depositing it or physically logging it into the system and in the ordinary course of business. They’re not doing it for the purposes of litigation. That’s their ordinary course of business and that’s what they do normally.

The boarding and incorporating process from the prior servicer is what becomes very important in Florida and those situations where it’s traveled and changed so many times and how you can rely on the payment history. For instance, now, that doesn’t show those past dates is that boarding and incorporating process. What the courts will look at is, “In this instance, Labrador Lending received a payment history data from the prior servicer. Did their servicer or Labrador themselves input that information into the system? Was there a QC process to make sure that it was accurate? Did they see any red flags in the prior payment history? Is there anything that was done incorrectly that they had to fix?”

Basically, that front-end process of taking company A’s records, and then converting them into Labrador’s records is what is important to the court. That allows the court to have that prior servicer exception and allows them to essentially say, “The records were boarded and incorporated into Labrador Lending’s payment histories and they’ve been QC and this is the process. The person who testified knows that this is the process and this is what happens.” That person then makes the records reliable. Where that gap becomes concerning just from a litigation perspective is any hole and the payment history is a hole in your case. It doesn’t mean you can’t recover. It just means that there’s a chance that the damages aren’t going to be deemed sufficient.

The judge could decide that you have no proof that the default occurred if you don’t have the payment date of the default in your payment history. If there are other screenshots and stuff, again, there’s other evidence that can get around those things, or at least go to show or to prove that 51% mark that you have to have for the case to be proven by the preponderance of the evidence. Generally speaking, the more information and the more history you have, the stronger your case is going to be.

You don’t hear about pay history in other states, at least from my experience. I don’t know about you, Chris.

There are certain states. Oklahoma is another one that is really anal. Oklahoma goes to the point of, if it doesn’t state whether a person is single or married, that’s a fiasco. I’ve seen it in Pennsylvania as well. In some of the judicial states, yes, but in Maryland, which is quasi-judicial, I never had an issue with it there. Florida is one of those places where I’ve definitely seen it.

The majority of the work happens at the beginning of the action. Click To Tweet

For this deal, I don’t recall the pay history being too big of a concern. The fact that I didn’t switch servicers probably helped. There were a couple of issues. One was the assignment to us had some issues that we had to take care of. Paperstac was great to work with to get that addressed. We got that fixed, but the real big issue that I was focused on at that point was the allonge from 3 or 4 noteholders prior. Erin refers to it as an endorsement but it had the wrong company name on it. I had to go back to research to track down. I was making some headway there and found the guy I needed to talk to. He kept saying he was going to fix it, sign it, and all that stuff. There’s no incentive for him at that point to even cooperate unless we threatened legal action against him. Erin can speak to that better, but he kept saying he was going to do it. I think he was busy and the bottom line is I never actually got that, but that’s when the deed in lieu wiped out all these concerns.

Once she indicated that she was willing to sign the deed in lieu, the allonges and stuff became a backburner item for the time because we focused on resolving the default in general through the deed in lieu. Rather than risking it through the foreclosure because of that specific issue and potentially not knowing whether or not we’re going to be able to get it fixed.

How far down the line did you get with the foreclosure? I’m guessing you sent a demand letter. Did you file a complaint as well and did it make it to that stage or how far did you get?

We got it settled before we filed suit. We didn’t even have to get to that point. We wouldn’t have filed suit without fixing that allonge situation, at least to the best of Jamie’s and our ability. Sometimes you have to file with not the best-case scenario and see what happens but in this instance, we were able to fix it before getting the deed in lieu before we filed suit.

Jamie, as part of the deed in lieu, did you offer Cash for Keys?

No, she just accepted it. The reality is, she was getting a lot of debt forgiven. I wasn’t going to be cutting a check. I did not cut a check to her. She owed $132,000 and she was walking away without a foreclosure and a considerable amount of debt forgiven. The property value wasn’t quite as high as I hoped. In that sense, she had even more debt forgiven. I’d say she probably realistically had $20,000 to $40,000 in debt forgiven. In a sense, that’s a Cash for Keys.

One thing that I found in some of these deeds in lieu situations, which we’re working on is, sometimes instead of offering up the cash, it’s to give people time. I found people are more interested in time than they are in cash, whereas, “I’ll give you $1,000 if you’re out in two weeks,” or “Towards the end of April, I’ll give you to June 1st to June 15th,” If you think about the money you’re saving, whether it’s rent or whatever it is. It’s equivalent to cash and the reality is, it’s time but it’s not burning a hole in your pocket where you’re actually putting out the money.

That is definitely what happened here. We gave them two months. It turns out that the borrower to my knowledge was not actually living in the property. I’m not totally clear on that. I probably never will be. We got a call from her brother-in-law saying that he was renting from the borrower. I forgot to mention that she was on a three-year trial payment plan. Instead of her payment being $1,100 to $1,300 total, it was $400, including escrows for three years, and she was still failing. This was prior to me purchasing the note and that forbearance agreement and trial payment plan was executed. When I purchased the note, choose in the middle of that, and was still not paying, and apparently collecting rent from her brother-in-law.

Back to your point about letting the occupant stay in the property for some period of time, we allowed them to for months. I don’t know if she was physically there or not. We were giving them November and December to stay in the property. As we’re getting closer to the end of that two-month time period is when the occupant, her brother-in-law said, “You’re going to have to evict me.” He claimed he wasn’t leaving. This was coming up around the holidays. The reality is you have to file for, Erin knows much more about this than I do, a fifteen-day notice for eviction. The fact is, it wouldn’t be in our best interest to try to kick this guy out on December 20th, or something like that. We gave until January 1st or January 2nd. They did end up buying a house of their own, from what I understand, and vacated the property at that point.

I have a borrower who actually was buzzing my phone who has the same thing, payments of about $400 a month and they haven’t paid in about five years. 2014 is the last payment received. I bought the loan in November 2019 and of course, things with the legal process stalled, but the borrower is looking for forbearance because of COVID-19. Six years prior, they haven’t made any payments, but now they want the forbearance. It’s interesting in regards to you seeing some of these trial payment plans and stuff. You try and put them on and they still unfortunately fail. When you have that conversation with them about, “When’s your rent payment going to be?” That’s when they realize, “I can’t lose this house.” It’s like, “You can’t afford the house.”

I wanted to make sure both the borrower and her brother-in-law were not playing me here so I did request a copy of his purchase contract for the house he was allegedly buying. They did produce it. His real estate agent seemed legitimate to me. I was willing to work with it because I do think they had some medical disabilities and things. When we talked about the property itself, it’s clear they were not living in the healthiest of conditions. I was willing to work with him a little bit there, and it turned out well in that regard.

The question I’m going to ask is jumping back to the deed in lieu because it’s a mistake I see a lot of people make and it’s not ordering a title report before taking on that deed in lieu. Was that something you did? What did it look like?

GDNI 107 | Note Investing In Florida
Note Investing In Florida: The more information and the more history you have, the stronger your case is going to be.

 

Yes, we did and that was definitely Erin’s suggestion and we ordered it through Erin’s firm.

I had an instance for a property once that when I bought the note, I ordered the title and everything was fine. About four months later, a borrower went to do a deed in lieu and I’m like, “I’m just going to order the updated title.” It’s one of those things where it’s like, “I just ordered it. I don’t see anything online.” Lo and behold, because the borrower was collecting rent, it was a duplex where they weren’t paying. They had a property manager. The property manager filed the $12,000 lien against the property. I was literally ready and they had signed the deed in lieu and I only needed to sign it and thankfully, I had my attorney call up and say, “We’re not signing this. There’s this lien on it.”

That’s a good point. It’s not something most people would probably consider doing. I did work for a title company years ago for a couple of years out after college. I’m baffled that our school system doesn’t teach anything about title insurance or buying a house with that. That’s a rant we can go on. One of the things I remember is even if you get title insurance, that’s the only kind of insurance or one of the very few that goes backward. Your homeowner’s insurance and car insurance cover you from this point on, or maybe a few weeks ago forward. Title insurance does nothing for you beyond that date.

One of the things with a deed in lieu that I always look for is clear title, but there are ways around that so that you get out of having the borrower defenses raised and stuff like that, but then you can still proceed with your foreclosure on an uncontested basis, which does accelerate it. Depending on the state that you’re in. Florida, for instance, does allow non-merger deed in lieu, which is essentially a deed in lieu with merger language that says it doesn’t matter with the outstanding debt, the mortgage. It’s separate from that. What it allows you to do is to take the title from the borrower, and then you can foreclose the remaining interests below you or inferior to you in the process. If you do want to do a deed in lieu on a property, the very first thing you need to be looking at is whether the title is clear. If it’s not, is there a way to rectify that? Can you take the deed in lieu from the borrowers to avoid their defenses in the foreclosure and then proceed with filing suit against the underlying lien holder so that you can get rid of any interest they have in the property? That’s something you can do.

I’ve never heard of that. It’s basically a deed in lieu, you get the property then you’re just foreclosing. Technically you’re still in first, you’re just foreclosing on people behind you. Can you do that with condo and HOA fees and stuff like that? If someone’s like, “I don’t want this condo anymore.” They’ll foreclose and then I know you have to pay the twelve months, 1%, or whatever it is. The fees are lower than that. I’m curious if you can still do it in those instances?

They become liens like anything else. If they’re inferior to you, they can be foreclosed. Some people reading this are going to be second lien holders. Most of Florida has ironed out where a first lien is going to be superior to the assessments of the association. This is other than the Safe Harbor you’re talking about, which is the twelve months or 1%. Second mortgages, in many instances, are not superior to the association. You can’t foreclose the association anyway. Getting a payoff on any superior liens to you is going to be your big concern there. If you intend to keep the property, figure out your bid if you’re intending to sell it, or let it go to the auction, decide what you’re going to bid at the auction based on what the outstanding superior liens are. It can be done. It’s a matter of making sure that it’s done properly so that you can get rid of everybody that you can. You’re only on the hook for the things that you are aware of that is in front of you. The associations definitely one that can be foreclosed on to the extent that the declarations allow.

You got the deed in lieu and you got the borrowers out of the property. What was the property condition like?

Part of the stipulation with the deed in lieu was that we would be allowed access to the property. We did an interior inspection. It was also supposed to be room swept. I do have some takeaways from all of this. Looking back, we didn’t do a thorough enough interior inspection while we had that 2 to 3 month period where the people were still there. It’s a little more challenging when there’s all kinds of junk and everything in the house. Based on the interior inspection, I was pretty pleased with the condition of the property. I probably should have ordered a more thorough inspection, frankly.

Who would you order from? A realtor or a home inspector?

It was SafeGuard. They did a good job based on what I ordered. I should have paid more for a more thorough inspection. Ultimately, it probably wouldn’t have changed anything, it just would have properly set my expectations. For 2 to 3 months, I was thinking, “We might need $5,000 to fix this place up.” At that point, I was going to sell it. I had no interest in keeping it. I came to find out that we definitely needed a new roof. There’s $8,000 or $9,000 right there.

$5,000 turned into $35,000 is my guess.

It turned into $25,000. We have tenants in there and it’s starting to creep up a little more. That’s the reality of things. The bottom line is we were in it for about $50,000 as far as the acquisition of the note and Erin’s legal fees. We ended up putting $25,000 into it. All in, we’re in about $75,000 which is still pretty good considering we did a pretty good-sized rehab. We didn’t fix everything up but we put new flooring, repainted the entire house from exterior and interior, and a new roof. There are tons of leaks coming in from the old roof so we redid what we needed to. We put a lot of trash out, cleaned up in the yard. I do expect the maintenance costs to be a little lower than they would have been had we held this as a rental and not put so much money into it upfront. I was going to sell the property.

The majority of the work happens at the beginning of the action. Click To Tweet

I listened to a podcast that was a case study or a look into the Jacksonville rental market. I’m not sure if we’ve mentioned before that this is in Jacksonville. It got me on to keeping it as a rental. I said, “We have several rentals already locally but not one at a distance. Why sell it now if we don’t desperately need the money to buy another note or something else?” I can sell it in a year if it’s terrible. We fixed it up and made a profit flip. We have tenants in there. It was advertised for two days before we got a twelve-month lease. This was in the middle of the pandemic so I’m glossing over some things as far as the rehab, selection of the property management company. I did two blog posts on this, one in December 2019. I was a little overly optimistic at that point. In hindsight, it’s still been a good deal as far as the numbers go. My second blog post is a two-page PDF that breaks down the numbers in much more detail than we’re going over here. Unless you’re going into Baltimore City or somewhere where you’re going to have so many headaches. You can’t find those numbers in Baltimore County, which is where our rental portfolio is. It could have been better but it was a success story.

I have three questions. How did you find the contractors? How did you find the property manager? What did you end up getting for rent on the property?

It’s $1,075 for rent.

That’s the 2% rule.

One point forty-three percent is what it came in at. Our rentals here in Maryland are probably between 0.8% and 0.9%.

As you get closer to DC, that number keeps creeping in. I was on Facebook one night and someone was talking about the 2% rule. I said, “My market here is 0.5% or 0.8%.” They said, “That’s a little crucial. You’ll go broke.” I said, “Everyone I know who’s bought real estate in DC in the last fifteen years is driving the fanciest car because of the appreciation.” That’s one thing people forget. You don’t have positive cashflow. I’ve got a condo six miles from DC that I bought years ago for under $100,000. Things worth over $200,000 right now have a cashflow worth $50 a month.

Our first rental was a condo and it’s close to where we live. We have had one tenant in there who comes to my house with six months of checks and drops them off. He’s the nicest guy. He’s divorced. He doesn’t want to own anything. He’s been there for over ten years. Could we take the money and do better with it? Yes, but I barely even think about this thing.

Erin, do you own any investment property? Do you invest?

I would if we didn’t run two of our own businesses. I have always enjoyed real estate. We did well on the existing property that we have here. I bought in Woodlands in 2011, which is in Oldsmar, north of Tampa Bay. This house initially went on the market for about $240,000. It was totally out of my price range at that point in my life. It’s in this nice kept neighborhood. It’s established. It’s been here since the ‘80s. It’s got all these beautiful mature trees. We ended up lucking out in getting this property at an estate sale. The person that had owned it had no mortgage on it and had passed away and deeded it to a nonprofit that he ran in Illinois. They did not want the property anymore. They put it out on the market at $240,000. They had an offer at $180,000 and they declined it. Three months later, they were freaking out because they had to take care of the pool, lawn, and all that stuff.

When we took a peek at it, they had gone back out to try to find those buyers at the $180,000 hoping that they would want to purchase the property. Funnily enough, the realtor had total diarrhea of the mouth that she was telling us all this stuff about that she shouldn’t have because we wanted to buy the property. Our initial offer on it was $160,000. We settled at $170,000. They gave us a $3,000 stipend for fixing this office. We ended up purchasing at $167,000. The neighborhood average is probably $250,000 to $300,000 at that point. Florida is crazy with RE values, it’s probably in the $350,000 to $375,000 range the last time I had it appraised. We have put a lot of work into it because it was original when we got it. Overall, with a market starting to slow down, we still have plenty of equity in the property. Things are still selling crazy here.

I was thinking to myself, “I have this 401(k) that’s sitting out there. I lost money in the stock market on it. Do I want to take it out and start investing?” I started going to these conferences where I started meeting everybody. I was like, “I can do this. Why am I not investing my 401(k) into investment properties?” I have not taken the dive or the funds yet but it’s coming. I started the firm a couple of years ago and my husband’s company also started around the same time.

Can you talk about your husband’s business a little bit? It’s actually a pretty cool business. I heard it and I’m like, “That is awesome.”

GDNI 107 | Note Investing In Florida
Note Investing In Florida: Managing notes takes work. You have to have your own systems established well.

 

Let me finish the investment piece first because otherwise, my brain won’t be able to go there. We decided at that point that we’re keeping all of our money and in a conservative, still sitting in the 401(k) situation until we know that the companies are taking off. At some point, I’ll probably pull at least a little bit out to start doing it. I’ll be reaching out to you guys to ask a million questions because I don’t know your side of it at all. The short answer is no. I don’t own anything besides my house and I probably should. I wish I did. The perfect time to invest is when the market is taking the turn.

I’m sure you probably know. Especially in Florida and Georgia, you’ll start to see additional cases starting to hit in those areas.

I’m conservative with investments. If I were to get started, what I would do is reach out to somebody that I knew that was in the business and say, “Can I give you $10,000 to get my feet in the door and figure out the situation and go from there?” I can build up and do it from a holistic or bootstrapping model rather than going out and looking for funding and all that stuff. That’s my thought process on starting. That’s where a lot of people are concerned. They’re like, “I don’t have the money to buy a whole house.” You don’t have to. You can buy parcels in the note industry. You don’t have to deal with like you do, tenants if you don’t want to. You can just own the paper and be done with it. There have been plenty of success stories on that side of things. There’s definitely a lot to the academy industry.

Do you have a solo 401(k)?

I do. The rest of my 401(k) is in the businesses. We cashed out a lot of it to sell funds while we started, mainly my husband’s company.

I want to jump to Jamie about something that everyone struggles with, which is finding contractors and property managers. I’d like to hear that side of the story. I am interested in two things. One is your husband’s business and then secondly, the overall cost of foreclosure in Florida. That POS attorney I used in 2018 on two cases that somebody referred me to, I can finally call them that because of what they charged me on these two.

I was open in 2018.

I know. Somebody referred me to somebody else, saying how great this attorney was and this person is the worst.

As far as finding the property management company, honestly, I probably got a little lucky. I did some research by talking to people in BiggerPockets and different Facebook groups and whatnot. I settled on Suncoast Property Management. They’re pretty big in the Jacksonville area. How I got tipped to them initially was through that podcast that I listened to. I contacted the host through another group that I’m in. He put me in touch with the property management company. Even though they try not to, they try to make you go through their company first. I got in touch with Suncoast and did some research on them. In general, they have good systems. It’s interesting because we hired a property manager locally for our rentals, probably March of 2019. These two management companies could not be more different. Our guy here is great but it’s a small staff. I go to one person and I know exactly who I’m talking to.

Whereas with Suncoast, I’ve had three different main points of contact already. The consistency is not quite there but I will say that their systems are phenomenal. They know what they’re doing. Let them do their process and it will work out. It may not be on your timeline but they’re a professional company for sure. I relied heavily on them to find the contractors. Had I been down there managing the contractors myself, I probably could have done this for $15,000 to $18,000. They’re obviously making money on it. I probably could have done it a little faster but I’m 750 miles away. It is what it is. All in all, I was pretty happy with the job that they did.

They would recommend and give me bids on a few different contractors on each part of the project. We’d make a decision and go from there. It’s like managing notes or anything else from a laptop and a phone. It takes work and you have to have your own systems established as well. That’s how we settled on the property management company. Mario Bros. Restoration did a phenomenal job. They did most of the work. With that said, if it’s terrible, you can switch property management companies. We’ll see how that goes but that’s how I settled on them.

Have you physically gone and seen the property?

Smaller investors are high-touch. They want to keep things moving. Click To Tweet

I’ve never been to Jacksonville.

Business write-off?

Yes, I was starting to talk about it and then COVID happened.

Tampa Bay is where it’s at.

I have a coworker who is down in Lakewood Ranch. That’s not too far from Tampa, is it?

No. It’s a brand new area coming up.

Erin, a quick question. Jumping back to Florida foreclosures on the typical timeline in costs uncontested. Contested is a whole other animal. If someone recommends, “I’m looking at bidding on a note and it looks like it may go to foreclosure in Florida. What should I budget for costs uncontested? What would you think for a timeline?”

Uncontested, you’re looking at probably six months to a year on the timeline. The fastest foreclosure I ever did, which was in my legal assistant days in 2003, was 82 days. That was literally doing everything on the day it was allowed to happen, setting the hearing quickly, and making sure that all the paperwork was in. Those are long gone at this point because of all the different requirements. That was also when foreclosures were $1,200. There are a lot more involved in them now. Six months to a year is a good timeline on an uncontested case. It shouldn’t take any longer than that. That’s from complaint filing, not just file received. The front-end is doing all that work to make sure that the paperwork is all in order is its own animal and involves you guys pretty heavily. After that, you guys have to sign a verified complaint and then we file it, serve as a process then go to your judgment hearing. You’re going to have to sign an affidavit for your government hearing. Hearing goes forward, the auction is set, and then it goes to sale usually around the 30-day mark if there’s nobody there asking for more time.

The cost to do that from a Fannie Mae perspective is $4,100 as the entire fee. It’s done in five milestones, essentially. You pay 30% when files received in house. I usually charge that post demand letter. If I’m sending a demand the day I get the file or within a couple of days of getting the file and they reinstate the loan before I have to do any real work on the file, I don’t feel like I should charge that 30% fee up-front. What I usually do is charge you guys for the demand letter and the costs. Most of them are under $150 for the cost of the demand. If there’s a lot of work for a loss mitigation perspective, it does kick into an hourly rate or we do what’s fair. If that final received milestone is charged at some point and we start doing loss mitigation, I tie that all into that fee. I’m not going to charge you to receive the file and then charge you to work with the borrower, at least not prior to the litigation being filed.

If it is something where it’s expensive, I’ll reach out and say, “Can I charge a little bit for this because this is what’s happening?” This is the outlier but for the most part, that demand period is going to be super cheap for you guys. The 30% is charged once the demand fails and we have to proceed with the foreclosure. We’ve ordered the title and charge file received. Once the title comes back and a complaint is filed, you’re charged 20%. Service complete, you’re charged 20%. Judgment entered, you’re charged 20%. Ten percent once the sale is held and the certificate of title is recorded. It is a heavy front-end process and that’s just fees. Your main costs in Florida are going to be title search which is about $200. Your complaint filing fee is a graduated rate based on how much the value of the action is. Whatever your payoff is, is your value of the claim that you have to pay the filing fee based on that. It can range from $400 to $905 to $1,905. They charge $10 per summons and little fees at the courthouse for different things for each action that are going to vary. The filing fee is going to be the big chunk.

The service of processes next, obviously paying the process server. Depending on whether they’re avoiding service or they are easy to serve could be anywhere from 4 to 15 defendants, the service of process costs are associated. They generally are within the $500 to $1,000 range from a cost perspective. It is just a pass-through cost, not something that we upcharge. That comes with that service complete milestone is when you’re going to see that. For the most part from there, there’s not a ton of cost associated. Everything’s going to be front-end heavy. Everything will be included in your final judgment and can be attached to your credit bid when you bid at the sale. If a third party or if it gets paid off, for instance, you should be able to recover all of those amounts. Those are your big ones. The $4,100 split over five milestones. What I do see with a lot of the smaller investors is that a lot of the foreclosure counsel charge straight up hourly rates.

Admittedly, I will say this. Working with smaller investors, because you guys are high touch and involved in your portfolios, you have much more of an interest in moving your cases as fast as possible to free up your own money. Big banks, it’s a number. They’re sending you 600 files a month so they don’t care. I understand the hourly or at least an increased fee based on that. I’m sure there are plenty of attorneys that do follow the Fannie Mae guidelines. Fortunately for my clients, I follow them because I use technology to assist me. That’s how I was trained in a big firm. The two big firms that I opened and are still open and doing business that grew from three employees to 400 all use technology resources. I’ve been lucky enough to be involved in the programming, technology, and in the handling of it. I know a lot of lawyers are afraid of technology. They actually have a rule in the bar in Florida that you can apply to not have an email address associated because you don’t have an email. Who doesn’t have an email?

GDNI 107 | Note Investing In Florida
Note Investing In Florida: Six months to a year is a good timeline on an uncontested case. It shouldn’t take any longer than that.

 

I utilize the technology the same way I would with the big lenders. I do understand that the hand holding is there. If I see that there’s something that’s good off-rail, I’m saying, “Can I have a couple of hours to handle this one issue?” I don’t think for the most part I’ve had that issue. With Jamie’s file, I don’t remember if we charged you the file received fee or not on that one. I know that we included all of the loss mitigation and whatever the bill we sent was, which I don’t remember. That’s overall for Florida.

I was on two condos in the same complex. It took about eighteen months. It was uncontested. Each file ended up costing me over $8,000.

I could see that. Full foreclosure, you’re probably looking in the $6,000 to $7,000 range, at least on uncontested. You didn’t get too bad of a deal. It also depends on whether you went to mediation because there are fees associated separately from that.

They were dead so we didn’t have to mediate.

The other piece with deceased borrowers is going to be the heir search. The heir search is extremely expensive. There’s a private investigator that most of the firms have worked with for fifteen years named Skiff Dvornik. He’s an amazing guy. He can find anybody.

Does he do nationwide or just Florida?

I think he does Florida for lenders but he can potentially get death certificates from other states. I don’t know if he’s got connections though so I can absolutely pass along your information. He’s a great guy. The first firm I was at is Ron Wolf’s office. It was Cheverie and Associates when I started there in 2002 and that’s where I met Skiff. I also have TLOxp so if it’s something I can search for you and try to see if they are showing up as deceased in the skip trace.

I spoke to them about getting signed up. I’ve got some files and this was one of the questions I was going to ask. Florida deficiencies are allowed, correct? Do you do for deficiency judgments?

The answer is yes. They’re usually on the backend of the foreclosure. You do the foreclosure first and then it’s either a supplemental complaint or potentially a motion in order on the backend of the file.

One of these I foreclosed on, the borrower has other properties in another state. They walked from it and it was a strategic foreclosure because the relationship with the attorney I had had a lot of conflicts. They would never answer any questions. The only time they would ever answer a question is when they send me a bill. Their excuse for not responding to any emails was that they were moving. They’re living with their mother-in-law, and he was going through a lot. I’m like, “Okay, great, but I don’t need to know your personal life.”

You don’t care.

I don’t care.

There's a lot more behind the scenes that people need to look at than just what is on the title. Click To Tweet

We all have our problems. I can’t say that it’s never been something like a sick kid or something has gotten in the way of me responding, but it shouldn’t be an all the time thing. It should be an outlier. Especially knowing when you work with smaller investors that they are high-touch and that they are wanting to move things. There shouldn’t be that lack of communication.

Jamie, anything else? What are some of your lessons learned?

Three things to improve on. Speed, with the time value of money, this whole thing took a year. We could have done a better job and by saying we, I mean me. It wasn’t terrible and there are certainly reasons for everything.

You can blame your wife. She’s not listening.

Speaking of my wife, we have tightened up a lot. She started working for the business officially. She handles most of the due diligence, especially on the title side of things. When I bought this, I was flying solo and maybe skipped a couple of steps that I shouldn’t have, but I do think we’ve improved things dramatically as far as our processes. Time value of money, what can you do with that money while it’s tied up in some note or property in Jacksonville? We could have done this in 8 or 9 months instead of twelve.

It’s a good point, though, with the allonges because most people only think of due diligence on documents that are recorded. Allonges aren’t recorded, and there’s a lot more behind the scenes that people need to look at than just what is on the title.

That was in my mind. It’s like, “Allonges? Whatever.” “What are you talking about?”

GDNI 107 | Note Investing In Florida
Note Investing In Florida: It really does benefit investors to reach out to an attorney to do the due diligence process.

 

It’s not the most important thing in Florida. Let me say a point on that aspect of things. It does benefit you to reach out to an attorney in your due diligence process if you can get them to review it quick enough for you to put your bid in and stuff. I do run across especially the paper that you are buying that’s transferred hands 6, 7, 8 times. I do run into quite a bit of stopgap, things that are going to take you time to fix. In this instance, it was an allonge from Homeowners Friend to Bravo Credit that was done and there was a gap between Bravo Credit and Apollo Finance or something.

When we reached out to Apollo, he was like, “I didn’t get this from Bravo Credit. I got this from Homeowners Friend. I bought it from Homeowners Friend, not Bravo Credit.” There was essentially an incorrect allonge on the file and now a gap between the two. Not just you, Jamie, I have several investors that come to me that bought loans that were like, “I figured we could just deal with it after we purchase it. I’ve got the original note, I don’t care about the rest.” Those allonges are an endorsement for extremely important. I’m happy to see that you spelled endorsement with an I.

I was literally going to bring that up and you taught me what’s the spelling of that word. It still looks pretty odd to me.

It is interchangeable but the Florida UCC spells it with an I. I don’t know why Florida changed it or if it’s like that in other states, but I spell it with an I. You wouldn’t believe the number of clients I’ve had try to correct me on that.

I definitely Googled it when you first used that in an email to me. I’m like, “What is indorsement?” If it’s in a financial context like this, it’s appropriate, apparently. Negotiation when purchasing the note. We bought it for $46,500. It turned out, I could have gotten it for $40,000. There were two partners on this deal that owned this note, two sellers, basically. I was dealing with the one and his partner through a backchannel. I learned that I could have paid $40,000. You never know, but I think I could have bought it for less. Estimating the rehab costs, you hear this all the time. I listen to a lot of real estate podcasts. Once in a blue moon, you probably end up spending less than you thought you would but it’s extremely rare. I’ve done several rehabs myself. I should have known better but we definitely were on the light end when we estimated what this would cost us to rehab.

One thing I’ll mention with the rehab, BPOs. I’m negotiating a note with someone. I’m like, “The BPOs, all the houses are selling in a neighborhood for $125,000. I’m like, “Those are houses that have finished wood floors. They’ve been painted. Show me an REO that you’ve seen recently that has finished wood floors?” “You’re going to put easily $20,000.” $20 a square foot into a property is probably what you’re going to put in some sense. There’s easily a $20,000 worth of work in there. They’re like, “This is what the BPO says.” I’m like, “I don’t care what the BPO says.” Stick to your guns is one thing I would recommend.

One of the biggest I wish I would have that I hear is, and Jamie, you mentioned is the roof. Getting a good look at the roof and figuring out what the roof is because the roof can cause so much interior damage as well. Having a good roof on the property is important, even the inside value.

In Florida, you have these four-point inspections which is not a term I was familiar with to get insurance. That’s when the glaring issues with the roof were exposed. That’s when we realized that.

AC, roof, electricity, and there’s a fourth one that I forgot.

The HVAC. Those are the four. The heating and air conditioning. That was a huge chunk right there, you’re right. Another thing that slowed us down and cost money was the bedbug treatment. There were bedbugs throughout. I hope our current tenants are not reading.

At least it wasn’t a meth house.

I don’t think we would have known that from an inspection until you start moving things around. They had to do 3 or 4 treatments and you have to wait 1 to 2 weeks in between each treatment and go back. That cost us probably one month and maybe $1,000. It speaks to the condition that these people were living in. It’s pretty disgusting. I recommend people go to my blog to see the before and after pictures, to see a little bit of what the trash was like. There are not a ton of pictures on there. I can certainly send people more but it was another $1,000 for the trash out or close to it. It might have been $850.

Once in a blue moon, you could probably end up spending less than you thought you would in note investing. Click To Tweet

A potential suggestion for dealing with something like that and I know that we indicated that we wanted it to be in broom swept condition when she left and that didn’t happen. Sometimes what people do in conjunction with a deed in lieu and a settlement agreement is offer money on the backend. “I’ll give you $200, $300 if you make sure that it’s broom swept at the end.” That way you go in, you don’t have those trash out costs, you’re not dealing with just the headache of it. We do have some settlement agreements that provide for that information when they vacate. They don’t get their money until the inspection is done.

In this scenario, the actual occupant was saying, “You’re going to have to evict me.” My biggest concern was getting them out and then I can eat the cost of that but I hear what you’re saying. It makes perfect sense.

In this instance, the actual borrower didn’t live there.

I had a borrower who boom swept and vacuumed it and asked for their money, they left all their furniture, all their clothes, and everything they didn’t want in there. I was like, “It says broom swept condition. We swept the floors and everything.” They missed the line where it says “Remove all personal items.” They were like, “It says I get $500 if it was broom swept condition.” I was like, “No, that means basically empty.” They literally thought they would do the money.

Quickly, some things we did well. Networking and team-building from afar. Incorporating multiple real estate strategies, note investing, most of the parts of the BRRRR method where you’re rehabbing, renting, refinancing, and repeating. That’s still an option, it’s something I may look to do as far as pulling out some of the equity and either buying another note or rental property. Problem-solving along the way, and then improving our own processes for our note business. I don’t mean as particular to this deal, but we talked about the due diligence. We’ve gotten a lot better since I purchased this note as far as knowing what we’re doing and being more efficient and using technology like Erin was talking about.

Why I love this case study? It benefited so many different parties. The note seller had a problem note that he’d done a forbearance agreement trial payment plan. She still wasn’t paying. They wanted out as far as the note sellers, that benefited us for sure. The borrower walked away from tens of thousands of dollars in debt and no foreclosure on her record. We got the previous occupants out of an unhealthy situation. I don’t know what their current situation is but it wasn’t good. That’s what it came down to, we had to force them out to help everybody move along and get to a better position. Vendors, contractors, and the neighborhood, in general, there’s at least one house in a much better condition than it was before. Our current tenants, we’re providing affordable housing for them.

It displays multiple strategies in one project. This case study, I’ll probably have updates to it later. I don’t present this like I’m the only person who’s ever done this before, some guru or something, but it does incorporate several different strategies. You’re dealing with nonperforming notes, rehab, buy and hold rental from a distance. It’s probably the deal that I’m most proud of thus far. It also highlights many of the positive aspects of note investing in particular. Multiple options. I was trying to work with the borrower, ideally, you get the note performing and sell it. That wasn’t an option. Foreclosures and option ended up doing the deed in lieu. Both of you can speak to other note exit strategies, but it’s one of the primary reasons I enjoy note investing is it gives you options. You’re not pigeonholed, you’re coming in so early in the process that you have many different ways you can go.

Jamie, who negotiated the deed in lieu? You, the servicer, or Erin?

Erin and her partner at the time.

One thing that I would mention is when negotiating deeds in lieu, try to either have yourself or your attorney. I try and start with the attorney. Once they agree there might be something like, “I offered $500, they want $1,000.” At that point in time maybe I might do some of the negotiation and whatnot. I say that because I try and keep it away from the servicer. It’s no offense to servicers but the time is not their focus. They take time. I find attorneys or yourself are more aggressive in that sense.

The feedback I would have on that is, with a service or specifically. The borrowers are used to seeing paperwork come from that company. They’re probably inundating them with loss mitigation opportunities. They get something in the mail every month or every two weeks when they’re in default trying to get them to do something. I find that a lot of times something coming directly from the investor or from an attorney’s office makes them take it much more seriously. I’ve had opportunities to reach out and get in touch with borrowers that even the investor hasn’t been able to do because I have an Esquire after my name. For whatever reason, a lot of times, they just take it that much more seriously. We usually try to make that our first communication with the borrowers. Make sure that it’s strongly worded that they potentially know that this is time to make the deal if that’s going to happen.

GDNI 107 | Note Investing In Florida
Note Investing In Florida: Once in a blue moon, you could probably end up spending less than you thought you would in note investing.

 

I do think that was helpful in this case. We weren’t getting her attention the way we needed it, and then we did.

I had heard that Esquire is actually a title that they used to use for people who didn’t have a title back in the day. I do want to go back to Erin because I want to hear a little bit about your husband’s company.

Part of the reason I mentioned the prior military thing, Jamie, is because my husband is also prior military. My husband, a little bit of background, always wanted to be a commercial pilot. Obviously, as the planes have gotten larger, there are not as many pilots. The pay isn’t this great. It’s a lot of time away from family. He had a hard time deciding how to take his life on another path after that. He did several things via owning his own businesses. He did aerial photography for a little while because he is a pilot and he loves photography. He worked for the Department of Defense as a civilian contractor for a few years and was in Afghanistan and actually flew drones for the military.

He came back to the States and decided to start working at a satellite imagery company. He was an imagery analyst. When he was sitting at his desk one day, he was thinking to himself, “It’s annoying that I can’t see the type of car that’s on the ground. I can’t count the number of people that are on the ground because even though it’s brand new imagery, the resolution is 30-centimeter resolution,” which means each pixel is 30 centimeters. You’re not going to get much in the detail aspect of things.

He said to his company, “Why are we not augmenting this or supplementing this with drone imagery? It could be a good add-on for the company.” They were like, “We’re a satellite imagery company, we don’t do that.” My husband was like, “Someone needs to.” Enter Raven Spatial, my husband’s company. He started building out the idea to create the Uber of drone and smartphone technology using a crowdsourcing model in the gig economy to push that model forward. You can get on-demand imagery at any property want at a higher resolution than you would get in satellite imagery at any given time. You can order now and within 24 to 48 hours, you’re going to have your imagery from that property. We started the company years ago and it is technology-driven.

As I started listening to clients at a lot of these conferences and stuff I went to, I was like, “My industry and my clients are his clients.” I have people complaining about the lack of ability to get good imagery of the roof. Is there an air conditioning unit on the side of the house? Whose cars are in the driveway? Things like that. We decided to bite the bullet. He started it as a grad school project, he was going to build out his company while graduating with a degree. We realized that the university would take some ownership aspects of that so we decided that he wasn’t going to do it that way. He left school to form the company and to do it.

What he is doing is his company specifically is the technology aspects behind it. This is a fully built-out system that we’re working towards, but we’re not there. The idea is, let’s get orders from people that need this imagery. We will take it in house, prepare an automated flight plan, send it to our drone operators and they have an app that has all the tasks in a specific area wherever they want. They can choose to fly the flight plans and fulfill orders for him but they don’t have to do the actual flying. What it is, is it allows my husband to standardize it all.

Oblique imagery is a big one. A lot of you guys want to see the sides of the house, the conditions on the side of the house, but the roof too, and pool equipment, air conditioning units, all that stuff. He has three different products via smartphone imagery, which is all automated. The phone takes the pictures based on his inputs from it, not the user. The user is literally just the boots on the ground controlling or providing the smartphone or the drone. All they do is press a button and it takes off automatically, it flies an automated flight plan. It can go through whole neighborhoods if you want it to. It can do grid work. It can do the oblique imagery depending on what the user is looking for and provide a 3-centimeter resolution which is ten times better than satellite imagery. Down to the fact that you can actually see the roof like the tiles on an individual roof.

You can see whether the roof is damaged, how important that is to your investment properties, and especially on a quick basis that you guys need, for instance, in your due diligence process on the front-end. Rather than paying for this crappy BPO, that’s some realtor snapping a few pictures of the front of the house, you can actually see from the air what the property looks like, what the backyard looks like, and get an overall view.

Once the drone operator finishes, then they upload the imagery, and it’s all stored in the central repository for the end-user, for the client. The client can go back to that imagery. They can export it if they want to export certain photos. It will also come geotagged with all the information that was provided with it. It standardizes the process of the picture taking so that you guys have better, more clear, and timely imagery of your properties. Whether that’d be something you’re looking at or something you currently have that you want to monitor and keep an eye on.

Out of curiosity, as you start to build this out, a huge client basis also besides us as investors would be the preservation companies. Jamie and I, if we want pictures, we usually order stuff through them and say, “Send somebody by to go take pictures.” The same thing, they have mass people and so forth. From a scale perspective, preservation companies as well as banks, lenders, or appraisal people. That’s a cool idea.

His initial vertical was real estate because it’s easy. We’ve talked about a ton of different verticals for it. One being on the government side with the Department of Defense. Even counting bodies. When I say bodies, I mean people. You’ve got indigenous displaced persons on a border of Syria, how many people are living in that area, or change detection for IED beds. Things like that that can detect topography changes so that you can see whether or not there’s an IED laid in a certain area on a convoy route.

Note investing gives you options. It does not keep you pigeonholed. Click To Tweet

Another big one that we’ve actually tested is hurricanes. Hurricane Michael, disaster relief, FEMA stuff after a disaster goes through. A lot of times, you can’t take satellite imagery of a ground zero essentially until after the cloud cover clears. Drones take that away and allow you to be able to do quick analysis prior to getting that satellite imagery back at a much higher resolution. He went to ground zero during Hurricane Michael and did some missions, testing things out there for that.

There are several verticals, real estate obviously being one of them, and I agree, we have been speaking to Clear Capital about the value proposition for them with respect to their BPOs, and giving you a little bit more information on your BPOs. You, being end users, and the thought processes as a lot of you will gobble it up at least to see what it can do for you. Stepping into the middle towards the preservation companies and looking at the price point making sure that price-wise it works or those companies because they’re all competing for your work as well. Making sure that the price point is right for those BPO companies is definitely another proof of the pie.

There’s a huge need there for sure. Piggybacking on what Chris said. I’ll typically order inspections through SafeGuard. They’re good but the detail is not there. The consistency is not there. Sometimes are great and thorough, tons of pictures. Other times, it’s like, “What am I paying for? It’s a joke.”

I got one, a guy taking pictures of his feet. They did a great job but I’m one who if I see ways a company can improve, I’m not shy to give my two cents because some companies like to hear feedback, others take it personally. I basically said, “All I want is eight pictures of the property. Every time I order, get me eight pictures. This one is a guy’s hand. Doesn’t anyone actually look at these?” They take a picture of the house and it’s 1/4 of the house. I’m like, “What does the whole house look like?” It drives me nuts. It’s inconsistent the reason being is they don’t have in my mind a set protocol for each person that they have set out to do it. It’s just, “Go and take pictures of this property.” It’s not, “Here’s what you should be doing,” which is a standard operating procedure of, “Take two pictures of the front, two pictures of the side. Try and get a picture of the roof. If you can get the back, great. If not, what does the street look like?”

The drone piece of it is cool. A lot of people want the roof as the big driver there. I love that he can fly the drone remotely from an automated flight plan. It even takes the pictures automatically. The user itself has no inputs in the final product other than supplying their drone and getting paid to supply their drone in their area so that he can get the imagery that he wants. Everything on the backend is also QCed to make sure that the quality is there. With the smartphone imagery, he actually did it so that the person has to hit each frame and it’s a 360 panorama. It’s all standardized, it’s not the person hitting the button to take the picture. They have to frame it.

A good example of that is like the mobile deposits where you have to line up the check perfectly. That’s exactly the same concept just in an image form so that you can get a 360 view from the front of the house or the side of the house. Wherever the points are put is where that person has to stand or the app won’t even launch for them. It’s neat to see it come together, and hopefully, we’ll get it totally off the ground. He is fulfilling orders locally but we’re much bootstrapping while we hopefully get some investment funds but who knows with COVID.

Definitely an entrepreneurial family right there.

Them more than me, I didn’t ever think I’d own my firm, but it’s been working out, so it’s okay.

I want to thank Erin and Jamie for joining us. It’s been a great case study. Jamie, we’ll be sharing a story of ours together. Erin, you’ve got plenty of stories you could share as well. I’m actually looking at some stuff down in Florida that may be sending your way to get this seller to move a little bit. They’re being way too rigid from that perspective, but we will see. Stay safe, stay sane. Enjoy the rest of your day.

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About Jamie Bateman

GDNI 107 | Note Investing In FloridaFounder Jamie Bateman has been an active real-estate investor since 2010. He and his wife, Emily, manage a portfolio of investment properties in Baltimore County, MD. They have experience in both the mortgage and the title industries.

Jamie values integrity, consistency, and transparency. He takes pride in assisting those who are motivated to incorporate non-traditional investing strategies into their wealth-building plan. He also recognizes that sometimes homeowners come across challenging circumstances that necessitate creative solutions to help them stay in their home.

Jamie loves to spend time with his family. A former U.S. Army officer and collegiate lacrosse player, he enjoys slowly progressing at Brazilian jiu jitsu, watching football, and coaching youth lacrosse.

Read more about Jamie and Emilly’s story here.

Listen to an interview with Jamie here.

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