In this episode of the Paper Trail Podcast, Chris is joined by Fred and Tracy Rui of NoteInvestor.com, two of the most respected voices in the seller finance world. Together, they share how they accidentally found their way into the note business over 30 years ago—and how seller financing has proven to be one of the most durable wealth-building strategies across every economic cycle.
Fred and Tracy dive into how seller financing works, how investors can buy or create notes, and the right way to structure deals to avoid costly mistakes. They also discuss why due diligence, proper documentation, and having a clear checklist are non-negotiable for long-term success.
As key leaders of the Seller Finance track at the Paper Trail Conference (September 18–20 in Chandler, Arizona), they explain what attendees can expect: actionable strategies, real-world checklists, and hands-on education designed to help anyone from beginner to seasoned investor thrive in the note space.
Join us at papertrailconference.com to learn directly from Fred, Tracy, and other industry leaders. This is the only conference that covers the full note investing landscape—from performing and non-performing notes to seller financing, sub-to deals, and private lending.
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(00:42):
Foreign.
Of the Paper Trail podcast, Ihad the opportunity to interview
Fred and Tracy Rui fromNoteInvestor.com they are a key component
of the Paper Trail conferencethat we're hosting September 18th
to 20th.
(01:03):
They are leading the charge iswhat I like to say on the seller
finance track that we're goingto be providing at this event.
So we talk a little bit aboutthe history, their backstory, but
also what you're going to getout of the conference from their
perspective, which I think isextremely important and talked really
(01:23):
about.
This is the only conferencethat's out there that ties all of
the note investing optionsavailable to people together.
Whether you're looking toinvest in non performing notes, whether
you want to do sellerfinancing, you want to do sub 2,
you want to do privatelending, we've got experts in every
(01:43):
single category there tonetwork with and to learn from.
So in this episode we talkabout that.
You get to learn more aboutthem, their program and what they're
going to be offering at thePerry Patrol Conference September
18th to 20th in Chant, Arizona.
So hope you enjoy this episode.
So check it out.
(02:07):
Fred, Tracy, how are you doing today?
Good, good.
Yeah, we are happy to be hereand so excited for the conference
coming up.
Paper Trail, love the name.
Well, thanks for being a partof it.
It's greatly appreciateeverything that you do for the note
community.
It's exciting to have peoplewho are well respected and just really
(02:28):
know what you're doing be apart of it.
So we're trying to get, youknow, people attending and just people
in general to know more aboutPaper Trail and get to know the speakers
involved.
So like to start with lettingpeople again, let you talk a little
bit about, you know, yourstory and how you got involved in
node investing in the first place.
Well, you go first.
(02:50):
Well, all right.
So as in case people arewondering, Fred and I are married.
We've been married 27 yearsnow and we met.
Thank you.
Through the no business.
So we worked together and wemet through working together, which
is kind of cool.
So we have a great return on investment.
Hey, that should be my line.
I thought of it first.
(03:11):
So we came through that cameto the note business in different
ways.
So I grew up in a very smalltown up on the Canadian, Idaho, Washington
border and there's a lot ofseller financing up there and our
niche has always been sellerfinance notes.
And I worked for an attorneythat was a title company and a servicer
(03:32):
and they used to pull listsfor investors that would buy these
seller finance notes.
And that was kind of my first introduction.
And then I moved to the bigcity of Spokane, Washington, and
I responded to an ad forsomebody with closing experience
to come work for thisinvestment company that was buying
these seller finance notes.
That was in 1988 that I wentto work for that company.
(03:52):
And when I got there, thegentleman that had owned the company
had been buying notes for over30 years, so since the 1950s.
So just so people know, thisis not a new thing.
We have lots of new ways andtechnology to do it, but it's always
been out there.
So I went to work for them for10 years and I learned, I bought
seller finance notes all overthe United States and I learned a
(04:14):
lot from them.
And through that friend and IMet and in 1997, we started our own
company and started buyingseller finance notes for our own
account.
We refer some and that's whatwe still do today.
Yeah, I was on the other side.
I didn't start on the investor side.
I kind of started out in the world.
And I was in a 500 square footapartment, living on the west coast,
(04:36):
trying to figure out how I wasgoing to buy a house someday.
And I just happened to take anight class at a college and the
gentleman that was teaching itwas teaching basically how to buy
houses.
But then he did one week thathe did the financial calculator and
another week that he didbuying notes.
And I just thought that wasthe coolest thing ever because I'm
just like, wait a minute, Ican own the property, own the cash
(04:59):
flow and not the property, andnot have to worry about all the other
stuff.
So kind of just declaredmyself in business and spent a month.
Yeah, yeah.
So I spent $6,000 on a faxmachine and a computer that probably
wouldn't even run to this day.
Yeah, 92, 93.
And so, yeah, so then I, he,he taught me and I, I found my first
(05:22):
note and flipped it and I'mlike, oh my gosh, I just made more
money than I would make inthree months on one transaction.
And I never left my apartmentwith a bowl full of pizza rolls and,
you know, whatever.
So I'm just like, this is the,this is great.
So then I just decided to keepdoing that and I did that and eventually
I ended up being hired by theinvestor side because they wanted
somebody that, you know,experience on the outside and what,
(05:43):
how, you know, kind of brokersthought and the referral mentality.
And like Tracy said in 97, wejust kind of said, you know what,
we're Going to go our own way.
It was a little bit of aconflict of interest for us to be
able to buy notes.
When we worked for anInvestor, they're buying $10 million,
$12 million worth of notesevery month of private notes.
And so we just said we'regoing to do it ourselves.
We wanted the flexibility andbuilt the business that way.
(06:03):
And it's been awesome ever since.
I can't fathom just goingthrough a note transaction back in
1970 or 80, because pullingtitle, like getting a BPO or eyes
on the property, it's like,you know, you got to call somebody
and then like, how do you getthe pictures to you?
You know, like, you know, lookat, I mean, out of state investing
(06:27):
back then would be, you know,so chaotic.
Yeah, yeah.
It was a lot of, you know, Imean, the big thing really was like
the inspection of a propertythat was, you know, an appraisal.
You know, in the transitionfrom appraisals to BPOs and then
BPOs being in a professionaldrive by way, that worked for us
that, that sped things up.
There's been a lot of advances.
We both have been in this over.
(06:47):
Over 30 years.
There's been a lot of advances that.
I hate to be that kind of oldguy that's like, you kids don't know
how good you have it startingout today, but then don't.
But, you know, but, but you do.
You do.
There's a lot of, like, youknow, we didn't have a T value.
We didn't have, you know, we, I.
Mean, you know, so now thebeautiful thing about the no business
because we've embracedtechnology, is we can do it all online.
We can scan.
(07:08):
It's amazing what we can dobecause we can do it from anywhere.
Right?
You don't have to be located.
You don't have to berestrained by fax machines and overnight
services.
So we love the no business.
It's.
It's a.
It's changed over the years,but many of the same things hold
true.
You know, you got to reviewyour collateral, you got to review
the documents, you got to knowyour borrower, you got to know the
(07:29):
state laws.
And so that's what will bringto the paper trail, how to work with
those seller finance notes.
Because I know you're doingthree different tracks and seller
finance being one.
And that's the beauty of thenote business.
You.
You can come at it fromdifferent angles.
So people are usuallysurprised that there's 30 billion
with a B dollars of sellerfinance notes created every year.
(07:50):
So That's a lot of inventory.
They're all not buyable, andall those sellers don't want to sell
them.
But there's a lot of inventoryout there.
Yeah.
And each asset class that, youknow, everyone plays in, people got
to realize it's either a B ora T in regards to billions or trillions
of dollars in the space.
So that's where I think a lotof people in this space, it's very
different than traditionalreal estate investing because there
(08:14):
everybody is fighting over thesame properties are the same thing.
In the note space, people havevery different buy boxes or where
they're looking for and so forth.
So it's much morecollaborative where it's like, oh,
I got this.
Oh, it might not fit me.
But, oh, maybe you reach outto this person because they buy in
this location, the state, orthey do that type of deal.
Interestingly enough, somebodysent me a pool of loans the other
(08:38):
day, and one of them wasactually a wrap.
And I was like, whoa, I'dnever seen a rat before.
So it's kind of, you know,like, remember the first time I ever
saw the washing machines that,you know, would go in circles versus
the top load?
I'm like, well, that's pretty cool.
So I'm reading the documentsto try and understand it, because
I had never seen one.
And then, you know, Imentioned somebody.
I'm like, oh, I know somebodywho does tons of these.
(08:58):
These and, you know, sent itto them.
And I think he might actually,you know, be buying it and, you know,
he's thankful, so.
Absolutely.
One of the things that we loveabout this site, at least the note
side, is that, you know, over30 years kind of proved what.
What we already knew becauseit existed before us.
Us.
But it works in any economy.
You know, there's.
(09:18):
There's, you know, sometimesthe stock market's hot, and then
sometimes it's off.
Sometimes the real estatemarket's hot, and then sometimes.
Sometimes it really cools off.
And the note space is always worked.
For us, the only differencebetween a good and a bad economy
is who we're buying the notesfrom and who's creating the notes.
If the economy is going goodand people are selling off things
and creating notes becausethey want to, you know, they want
to sell their note to get intoanother investment.
(09:40):
If the economy's not goinggood, if it's.
If it's tightening up a littlebit, then they're selling notes because
they're trying to, you know,pay off things.
And then there's always the.
You Know, life happens, right?
You know, I mean, somebodycarries back a note.
It's a great idea.
And now I want to pay for mykid to go to college or I need medical
bills or pay taxes or travelaround the world, whatever it is.
So we have seen.
You know, everybody asks, doyou get concerned about the economy?
It's always an annual thing.
(10:01):
It's like I'm concerned from apersonal standpoint.
I'm concerned for me and myfamily, my friends.
Am I concerned about my business?
Not really.
Matter of fact, if anything,more notes are typically created
in a bad economy than they are.
But as Tracy said, it's a $30 billion.
So maybe one year is 27billion and the other year is 33
billion.
Well, guess what?
(10:22):
I don't buy any more notesbecause of that spread.
I mean, it's already more.
Yeah, no, and it's interestingtoo because a lot of questions we
hear a lot are about likeinterest rates and like how interest
rates and you know, interest rates.
For example, in my mind, withseller financing, as they go up,
then you probably see moreoriginations because people, you
know, will rather go throughthe easy process of originating when
(10:44):
interest rates are down.
Like you mentioned, Fred,people might be selling because they
might be trying to take, takethat money to go invest it or leverage
it for something else.
So there's always a, you know,this, you know, reasoning why.
And again, like real estate,traditional, when prices fall or
something happens, people justget very skittish.
(11:04):
Or like today when people areusing leverage like, oh, the rental
numbers don't work or whatnot.
Notes always work and youknow, and that's what?
At the right price?
At the right price, Exactly.
But I mean, I have never had asituation where it's like, oh my
God, I can't find any notes.
Like you said, we're talkingbillions of dollars.
(11:25):
Now.
Pricing might adjust or, youknow, things might change or it might
be a little slow one month.
But still there's alwaysplenty of opportunity for people
within the space.
Absolutely.
And if people don't want tobuy existing notes, they can create
their own notes.
With seller financing.
We see a lot of landlords whoare tired of being landlords with
(11:45):
taxes and insurance going upand tenants and so they are ready
to turn some of thoseproperties into cash flowing notes,
let somebody else maintain theproperty and pay the taxes and insurance.
So we're seeing a lot ofinterest in people creating notes
through seller financing.
Also using the wrap strategyyou talked about because they can
wrap around, you know, that 3and 4% debt that's out there and
(12:05):
they can charge 8 or 9%.
And those numbers work even ifyour property value hasn't gone up,
as long as you're a borrower,is good quality borrower.
So there's lots of greatstrategies that you can use in the
no business.
It's not just to buy a note.
Yeah.
And I think there's a natural evolution.
There's no barrier to entry.
So if you come into theindustry like I did, I didn't have
any of my own money to buy notes.
(12:27):
I learned how to refer notesto somebody else.
So once I learned the process,I referred them on to somebody else
and I got a nice fee and I get2, 3, $4,000, whatever I got for
referring the note.
And then you build enough ofthose, then you start owning pieces
of notes.
There's great strategies whereyou use somebody else's money to
buy a whole note, but you onlysell part of the note.
Now you own a piece of noteand then you eventually start buying
your own notes and start, youknow, small notes and then bigger
(12:47):
notes and then do it them outof your, you know, self directed
IRA or you turn to Chris andyou start a whole fund.
Yeah, I mean so there's no,there's this path of entry that goes
through that.
It's just, there's no barrierto get in and I don't know another
word, another financialrelated element where I get to set
my parameters.
I go if my hot button is whatstate it's in or my hot button is
(13:08):
the return or my hot button isit has so much equity, I, I choose
those parameters, know whetherI want to buy the note or not.
So one of the things that youknow, I appreciate and have the utmost
respect for the two of you ontoo is you teach people how to do
it the right way.
Because there is a right wayand wrong way.
And I'll just share an exampleof I received a pool which is a list
(13:31):
of loans the other day thatwere seller financed, that originated
and one of them that wasoriginated in 2023 and on the note,
you know, it was their own note.
It wasn't like a standard note.
They created their own notefile which actually they called it
a loan agreement, but it wasactually a note.
But I'm going through it andthen all of a sudden on like the
(13:53):
second page it had like allthe payments that they made, I'm
like wait a second, how.
And then at the bottom is aperson signed it from like three
years ago.
How did the I'm like they justbastardized and like changed like
the note and just stuck in thesignature page.
And I'm like, you can't dothat because it was a line of credit.
(14:16):
So they were putting like allthe draws in there that they already
did for like the last yearbecause the balance was supposed
to be like a million andthey've drawn like 800,000.
But they went and they put itin there and they're like current
payment amount owed, like onpage two of the loan.
And I'm like, how did theyknow what that was today?
How did they know in 2023 whatthat is today?
Time travel.
(14:37):
Time travel, Exactly.
And you know, they literallyjust, you know, bat.
And I'm like, okay, this makeszero sense.
So I'm like, I'm gonna pass onthese because like, does the borrower
even know they have this loanor what is, you know, did they actually.
Is that a real signature?
And you know, you, I sharethat story because you, there's a
(14:59):
right way and a wrong way andif you don't do it the right way
or you try and take someshortcuts on things, that's the one
area in this business that Isee where it can be catastrophic.
Someone asked me yesterdaylike, oh, do you ever lose money?
I'm like, yeah, we've lostmoney, but we've never had like a
massive loss and on things andso forth.
And they're like, well, I hearpeople do it all the time and I,
(15:20):
or do that.
I'm like, yeah, because theyjust don't follow the steps and they
take the shortcuts.
And now I'd love for you totalk a little bit about more, kind
of about the programs that youguys have as well and some of the
things that you've done in thecommunity you've built for people,
for investors.
Yeah, we found there was areal need for approachable, affordable,
(15:43):
hands on education.
And so after doing it for thatmany years, we decided to share that
knowledge.
And so we do trainings and wehave a membership and a community
and it's just a great way forpeople to come together.
Like you said, some people buysome kinds of deals, some others
so they can collaborate inthose methods.
(16:03):
We, we don't try to sell orbuy notes from people.
We want to just stay 100% educational.
We still buy and sell notes,of course, but our intent is really
to help them look for thethings we would look for if we were
purchasing a note.
And so we use a lot of my, mybackground's title and closing and
documentation.
And so we.
I'm a big checklist person andit was my job to hire and train the
(16:25):
people so that more peoplecould review files for that institution.
We had to make them quality,that we could securitize them.
That's no easy task withseller finance notes.
And so that I really likesystems and checklists and so we
share a lot of that withpeople in our memberships.
Yeah, I mean it was kind ofthat we entered into that about eight
(16:46):
years ago was kind of thatgive back stage a little bit where
you know, we just slowlybuilt, you know, we were asked to
do it earlier and we reallydidn't and we just thought, well
okay, let's, what would itlook like?
You know, now we have a littlebit more time.
So we built this wholecommunity that we have members that
join.
Like Tracy said, we didn'twant it to be a lot of money for
anybody.
We didn't want anybody tothink about, you know, you know how
(17:07):
it is.
So we, we basically supplied,you know, a bunch of videos.
We've got over 500 videos inthe membership and then we've got.
They can contact us with ahelp desk and we'll mostly do a lot
of deal review or we do mini camps.
We'll do like little mini camps.
Tracy did a marketing minicamp for five weeks.
I've got one on AI coming outthat we're doing together.
So it's very hands on, it'svery interactive.
(17:27):
They work with each other.
Like Tracy said, we won't buya deal from a member just because
we feel like it's a conflictof interest.
I can't give you good adviceand also be buying or selling deals
from you.
So our opinion, other people.
One thing we, we definitelywill be sharing at Paper Trail is
our due diligence checklistbecause I'm a big firm believer in
those checklists.
And you know, that's somethingwe'll be sharing with people in our
(17:50):
sessions just for being thereand, and you know, that's.
We've got 13 questions wethink you should have answered on
every seller, finance note you buy.
We talk a lot about if webelieve, if you want to be the bank,
because that's the thingeverybody talks about, be the bank.
I'm like, okay, you want to bethe bank, then you need to act like
the bank.
So you need to have systemsand processes and checklists and
(18:13):
use the right documents andnot get cheap and not.
And avoid title and avoid attorneys.
I know none of us like to paymore than we want to.
But those pieces are veryimportant part of the process.
I think we've had the samething, like Chris said.
I mean, you know, people askus, will, you know, don't you have
really big losses and stuff?
I'm like, my big losses isthat, you know, we own several tracts
(18:34):
of land in Tampa, but I own the.
Own the land or I have ahouse, you know, I lost a couple
thousand dollars becausesomething went wrong or whatever
like that.
If you buy it, right.
If you go through those checks list.
I mean, most times sometimeswhen we see somebody after the fact
that's already done a deal andwe're doing a deal review and go.
I mean, we may.
We don't point it outnecessarily right out of the gate,
but just like, you can see anobvious corner they cut or whatever.
(18:56):
And, you know, this industryis not that hard.
Just go through the list.
Take the time.
Go through the list.
Don't cut corners.
Because somebody said, hey,don't worry about it.
The value is really there.
Don't assume the value is thevalue that somebody told you.
Yeah.
And so, yeah, it's alwayslike, oh, yeah, don't worry, it's
gone up $100,000.
Sure.
You know, at least.
Oh, they're putting out.
And it used to be the waysthat, oh, they're putting a.
(19:16):
A Buc EE's or a Walmart acrossthe street or, you know, a new speedway,
you know, like, don't worry,it's vacant land.
It's fine.
You know, so there's achecklist and we, we share if we're
guilty.
Not guilty of one thing.
I feel like it's thatinterview where it's like, tell me
your, you know what, you know,what is.
What are they detail oriented?
Detail oriented.
You know, those interviews you carry.
(19:37):
Yeah.
But one thing we do, one thing we.
We've never.
Of everybody that's comethrough there.
I mean, no one is ever accused of.
Of not giving out enough information.
We share everything.
You know, just why not?
I mean, at this point, yeah,we're the same way.
And it's interesting.
I look at checklists and, youknow, and this is a.
Probably a bad referencebecause of what happened yesterday,
(19:59):
but it's almost like anairline checklist of going through
everything before you take off.
And people like, I had a womanwho invested with me in the past
and she wanted to go buy herown loan.
And basically I'm like, hey,I'm happy to help you out with due
diligence.
Do whatever.
She's like, no, It's a seller finance.
It's a C1, I'm just going togo buy it.
(20:20):
So she went bought it $40,000in Detroit.
Somebody seller finance it.
She bought it from them somecompany at 12%.
Well then basically she bought it.
She didn't collect one payment.
It was always non performing.
The borrower was a selfdirected Iraq owner.
So there was no recourseoutside of that.
(20:41):
She finally after three monthssent somebody by the property.
The property was boarded upand had like big holes in the roof.
There was like $9,000 in taxesowed on the property.
There were fines, there was everything.
And then she called me and waslike what do I do?
And I'm like just walk away.
I'm like there's nothing.
She.
So then she talked to anattorney about foreclosing and I
(21:03):
told him that property, that'swhat it is.
I'm like do you want to own that?
Because then you're going togo spend.
It was in Michigan which you can't.
You only get 75 bucks fromyour attorney fees to foreclose.
The attorney fees aren'trecoverable and you still tax is
going to get paid first.
And I'm not even sure youwould get above you'll own it and
still you know like oh thetaxes anything.
(21:25):
I think it sold for somebodybought it.
So she's like I'm just goingto go and bid like a thousand at
auction.
I'm like then why even botherbecause you're spending it sold for
like $3,000 at auction.
So not only did she lose herinitial 40, she lost another several
thousand dollars in going to foreclose.
But all of that could haveeasily been avoided because every
(21:46):
single note, I don't care whois buying it, you know you need to
confirm title and visuals on that.
Did she literally skip every step?
She literally skipped everysingle step.
And it was a company thatoriginated notes and sold them to
people and like oh, we've doneall of this for you.
And that is when anytimeanybody says we've done this for
(22:07):
you, do not believe them.
No.
Run away.
Yeah.
Just so people listening.
There's ways that she couldhave known that up front and that
is to order title and to getvisualized in the property some kind
of property condition reportor BPO or drive by appraisal.
You can check tap your titlereport will check taxes but you could,
you.
Can check taxes online, youcan google.
(22:29):
That before you even get tospending money on titles.
So there's all the ways to do that.
We, we Just never skip those things.
It's just we've been doing allthis time and we don't think we're
smarter and that.
So smart we can skip those things.
You just can't.
You just don't know what'sgoing to turn up.
Nope.
Yeah, you always.
Again, there's a checklist andit's just, just go through it.
And you know, some of thestuff is repetitive and a lot of
(22:51):
times, like I had one,interestingly enough this past week,
it was a property and thereare two properties with the same
address, interestingly enough.
And the same lender had giventwo loans on each property.
So it's like, what?
You know, and then which onewere we buying?
(23:11):
So we had to go back to thetape because they had different loan
amounts.
But all the data they gave uswas from the other one, not from
the one we were actually buying.
So it was just.
Now we're talking internally.
It's like, that's like an easything that honestly could have got
missed.
But we have a checklist thatis make sure the tape original loan
(23:32):
amount matches the loan amounton, especially on non performers
like that.
It's like, wait a second,those didn't match.
Is this the right loan?
Because you want to make sureyou're buying the right loan that
was on the tape.
Yeah, well, that's all thesort of things we'll all be sharing.
I know.
And all the different tracksof things that are the obvious gotchas
that you can easily avoid andeither find out and fix it or find
(23:56):
out and say, yes, move on toanother one pass.
So I mean, you work with a lotof people and you know, we talk about
checklists and doing thingsand stuff.
And you may have answeredthis, but I'm just curious too, you
know, as people who arelooking to come here, what are like
one mistake or several mistakes?
Sometimes you see newerinvestors make that, you know, also
(24:19):
try and help them avoid.
You know, I'll say outside ofbasically following that checklist
because that's kind of Rule 101.
So outside of the checklist,which is the due diligence thing,
like, so we give away thatlist and here's what you need to
do.
I'd say one of them is peoplegetting kind of yield drunk where
they're so focused on, youknow, they heard in their head that
(24:39):
they're going to get a 15%return or 14% return or 18% return.
And so they, they, they just,they obsess over that number.
And so, you know, Walt, Walt,poser A good friend of ours from
years ago would tell us, look,you know, if the deal's not good
at like 12%, it's not betterat 18% yield does not make up for
risk.
It doesn't make the deal better.
(25:00):
It doesn't sweeten the pot ina way because zero percent of zero
is still zero.
If you don't get paid, then itwasn't a good deal.
So.
Or 20% or 20% not made up.
So, so if you, if you focus on that.
So we've seen a lot of peopleand self directed IRAs are a very
good example of this.
People will sit on moneyearning absolutely nothing forever
(25:21):
to find their dream.
14, 15, 16, 18 deal becausethey saw a case study where someone
did something as opposed tobuying a solid, sleep at night, earn
10 on your money, 11 of money,8% on your money.
We buy deals at 8.
I mean, if it's a, literally,you know, it's a super low ITV and
good credit and everything onthe check, why not?
I don't even have to worryabout that.
(25:42):
So I'd say that's one mistakeout of the gate.
I'd say people do.
What do you think?
I agree with that.
I have sadly helped a lot ofpeople lately who bought a note before
they'd come to us.
So they, they did not gettheir assignment recorded, they did
not get the original note,they didn't get an endorsement.
(26:05):
And now they're trying toenforce and they can't.
And I just, I've seen thathappen like three or four times.
And I'm like, who did youtrust to do all that?
Oh, we trusted the seller toget it recorded.
Don't do that.
You know, just, just take careof it.
Nobody, nobody treats yourmoney like you do.
Nobody cares about it as muchas you do.
(26:26):
And so if you don't want to doit yourself, then, you know, work,
hire a third partyprofessional that you're paying to
do that, to look out for your interest.
So I've been surprised by that.
Like.
Huh?
They did what?
And so don't.
Yeah, just don't cut the corners.
So it's interesting, Fred,because I had this conversation with
somebody the other day andthey have like $30,000 to invest
(26:49):
and again, they're trying tofind that perfect deal.
And I'm like, do you realizethe difference between 10 and 12%
on 30,000 is like $600 a year?
It's $50 per month.
But the fact that you wait anextra six months, you're probably.
Or longer or longer.
And my wife is in finance andshe's made this comment to me in
the past because I always talkabout, oh, target yields and stuff
(27:11):
like that.
She goes, can you go open yourbank account and show me, show me
where it says in your bankaccount yield.
No, it shows a dollar value.
It's like it's all about howmuch you make.
You know, you want to targetyield, but at the end of the day,
you know, it's always abouthow much money are you making.
The yield is kind of thereflection of that, but at the end
of the day it's, you know, howmuch money did you make?
(27:33):
And if you're making on 30,00010%, you're getting $3,000 per year,
which, hey, look, that's, youknow, decent money compared to, again,
based on the risk, if it'ssecured asset with good equity in
it compared to some of theroller coaster rides you do on the
markets or other types of investments.
So, yeah, I think peoplefighting for every dollar.
(27:54):
Yeah, we're concerned, I wouldsay we're fairly conservative.
We tend to pick, you know, wewant, you know, better credit if
possible.
Is the noise guy.
We want to see, we want to seemore equity in the property.
Then we, the, the numbers havestatistically proven that there's
more equity in the property,the less there is a chance of you
ever getting that property back.
So we tend to lean towards that.
So, but you know, you, we getearly payoffs and you know, things
(28:15):
along the way that spike it up.
But you get to choose whatyour hot buttons are for sure.
Yeah.
I think there's a common sense approach.
Sometimes people, especiallyif they come from a technical background
analyzing a spreadsheet, thatthey need to step back from the spreadsheet
and just look at the deal.
(28:36):
Like, does this deal makesense and does this really, I mean,
how many strikes against itdoes it have?
I mean, if the borrower, dothey have equity, do they put down
payment?
Have they been making payments?
Is the property in good condition?
Is it a state that's easy todo business in?
I mean, pretty soon if they'reall like negative, but you've got
a great yield.
Ah, does this, does this dealmake sense or does it make sense
(28:59):
that the, the borrower wouldhave that money down, that they say,
maybe you should verify that?
I think sometimes people lookat only the numbers and they just
need to step back a little bitand just say, in a, in a normal world
where I was having aconversation with somebody, does
this sound like a good deal?
Or does this make sense to me?
We do that.
We do that all the time.
When we're looking at dealsfor ourselves.
(29:19):
We're just like going through,you know what, you know, like, I
don't.
Is this worth it?
Because Chris, you said itearlier, it's like there's a, there's
a ton of other deals rightbehind it.
So it's like, if you don'treally feel good about it pretty
early on, probably better just walk.
Don't be afraid to walk away.
And I guess that's anotherthing, you know, don't be afraid
to walk.
I will say one more tip that Ithought of just now.
If somebody buys a deal and ifit stops paying, don't sit around
(29:41):
and wait six months, ninemonths for them to get back on track
and stuff like that.
You jump on that right away.
Because we've dealt withpeople, members that'll call us and
go, I've got this deal, canyou help me?
When do they, you know, theystop paying?
I'm like, when do they stop paying?
It's like, oh, last January orsomething like that.
And like, what have you beendoing all this time?
Well, nothing.
I talked to him once and theysaid they were going to try and get
back on track.
It's like you need to.
(30:01):
There's a procedure, there's achecklist of what you do when someone
stops paying.
Yeah.
And works through yourservicer, of course, because there's
laws and rules and regs on that.
Otherwise it ends up onChris's side and it's a non performing
loan, guaranteed.
And you know what, the firstthing I'm going to do is going to
my attorney and say, send thatdemand letter.
And anybody ever buys nonperforming, I'm like, it doesn't
matter if they are thesweetest person on the planet.
(30:23):
You start the process becausethen it, then it puts a time frame
to get a resolution to it.
It's not personal, it's business.
No, exactly.
So, so without spoiling allthe great content as we wrap up this
episode that you're going tobe, without spoiling everything that
you're going to be doing atPaper Trail, what's one thing you
hope attendees, you know,learn or think differently after
(30:45):
hearing or attending event.
I hope they come away and theyunderstand a partial purchase and
a hypothecation because it'svery powerful that you can leverage
your money.
I hope they come away and knowthat they can do it too.
No matter where they are at intheir journey, whether they're trying
to level up or they're justtrying to get started, I think they'll
(31:06):
find everybody there is very approachable.
I think I want people to bemotivated, but even more so, I want
them to have a plan forthemselves when they walk out.
So if they already have anexisting business, this is how they
have the tools they need toget to the next level.
If they're new to thebusiness, they feel like there's
a path in front of them tofollow and start succeeding and begin
(31:28):
their journey in this business.
So not just a, hey, we're all motivated.
We're coming off a TonyRobbins thing, which, by the way,
I like Tony Robbins, he's fine.
But we want, we want.
I want you to walk.
I want you to walk away with action.
I want you to listen tosessions because you learn.
I want you to participate andhang out during a cocktail party
or a coffee party.
What I say today deals.
Deals like caffeine and cocktails.
(31:50):
So just, I mean, just learnall you can, but more importantly,
not just have those thingsbecause some people get stuck in
a learning mode over and over again.
Our focus on our track, Ithink, is, yeah, we've got a lot
to teach you and a lot you canlearn, but if you don't do any action
with it, doesn't do any good.
So I want to focus on theaction aspect of it, give you tools
that you can put into action.
Awesome.
And that's really a big focusfor everyone who's at this event,
(32:13):
is to give people tools,timelines, guidance, whether you're
a beginner or you're advanced.
You know, to bring up the nextlevel and provide people that great
content.
Well, friend Tracy, thanks forjoining me today.
For everybody, the PaperTrailconference is September 18th to 20th
in Chandler, Arizona.
You can go topapertrailconference.com to get your
(32:35):
tickets and people want toreach out to you, learn more about
your programs and everythingyou do.
What's the best way for themto reach out?
Noteinvestor.com I think isprobably the easiest you can get
on the list there for content.
There's over 500 probably freearticles on there.
And if you're stuck, there's aContact us and believe it or not,
we actually respond personally.
(32:56):
So there you do.
How long have you had thatdomain name?
You must add that for a while.
2000.
Yeah, 98.
Yeah, we went on some domainbuying sprees there for a while.
We do feel fortunate to havenode investor.com, yeah.
Okay.
Just for the record, when westarted the domain.
I started buying a lot of domains.
Trey's like, stop buying domains.
(33:17):
Why are you buying so many domains?
And then, like, I stopped.
And then five years later,she's like, why aren't you buying
more domains?
I know.
I'm like, some girls like diamonds.
I like all these domains.
Someone had one the other daythat was actually not a bad domain,
but they reached out to meand, oh, no, it was actually, no,
it wasn't domain.
It was.
It was like a Facebook groupor something.
And they asked me about it,and I was like, looked at it and
(33:39):
it was like six months old andhad like 6,000 people.
And it was public.
But I'm like, yeah, that'skind of one of those groups that,
you know, basically, it's likegetting YouTube views, or if you
hire somebody to give you,like, YouTube views, it's like, oh,
we'll just have the botsoverseas just, you know, get you
and stuff.
We're real.
No bots here, but we are Investor.com.
(34:00):
singular.
No s on the end that somebody else.
If I had to do it over again,I would have bought both domains.
Yeah, we didn't think of that.
We never thought about that.
So node investor.com and we solook forward to seeing you out in
at the Paper Trail conferencethis fall, Chris.
So thanks for hosting it,thanks for.
Listening this episode, andfriend Tracy, thanks for joining
(34:21):
and we'll see everybody in September.
Foreign.
Of the Paper Trail podcast, Ihad the opportunity to interview
Fred and Tracy Rui fromNoteInvestor.com they are a key component
of the Paper Trail conferencethat we're hosting September 18th
to 20th.
(01:03):
They are leading the charge iswhat I like to say on the seller
finance track that we're goingto be providing at this event.
So we talk a little bit aboutthe history, their backstory, but
also what you're going to getout of the conference from their
perspective, which I think isextremely important and talked really
(01:23):
about.
This is the only conferencethat's out there that ties all of
the note investing optionsavailable to people together.
Whether you're looking toinvest in non performing notes, whether
you want to do sellerfinancing, you want to do sub 2,
you want to do privatelending, we've got experts in every
(01:43):
single category there tonetwork with and to learn from.
So in this episode we talkabout that.
You get to learn more aboutthem, their program and what they're
going to be offering at thePerry Patrol Conference September
18th to 20th in Chant, Arizona.
So hope you enjoy this episode.
So check it out.
(02:07):
Fred, Tracy, how are you doing today?
Good, good.
Yeah, we are happy to be hereand so excited for the conference
coming up.
Paper Trail, love the name.
Well, thanks for being a partof it.
It's greatly appreciateeverything that you do for the note
community.
It's exciting to have peoplewho are well respected and just really
(02:28):
know what you're doing be apart of it.
So we're trying to get, youknow, people attending and just people
in general to know more aboutPaper Trail and get to know the speakers
involved.
So like to start with lettingpeople again, let you talk a little
bit about, you know, yourstory and how you got involved in
node investing in the first place.
Well, you go first.
(02:50):
Well, all right.
So as in case people arewondering, Fred and I are married.
We've been married 27 yearsnow and we met.
Thank you.
Through the no business.
So we worked together and wemet through working together, which
is kind of cool.
So we have a great return on investment.
Hey, that should be my line.
I thought of it first.
(03:11):
So we came through that cameto the note business in different
ways.
So I grew up in a very smalltown up on the Canadian, Idaho, Washington
border and there's a lot ofseller financing up there and our
niche has always been sellerfinance notes.
And I worked for an attorneythat was a title company and a servicer
(03:32):
and they used to pull listsfor investors that would buy these
seller finance notes.
And that was kind of my first introduction.
And then I moved to the bigcity of Spokane, Washington, and
I responded to an ad forsomebody with closing experience
to come work for thisinvestment company that was buying
these seller finance notes.
That was in 1988 that I wentto work for that company.
(03:52):
And when I got there, thegentleman that had owned the company
had been buying notes for over30 years, so since the 1950s.
So just so people know, thisis not a new thing.
We have lots of new ways andtechnology to do it, but it's always
been out there.
So I went to work for them for10 years and I learned, I bought
seller finance notes all overthe United States and I learned a
(04:14):
lot from them.
And through that friend and IMet and in 1997, we started our own
company and started buyingseller finance notes for our own
account.
We refer some and that's whatwe still do today.
Yeah, I was on the other side.
I didn't start on the investor side.
I kind of started out in the world.
And I was in a 500 square footapartment, living on the west coast,
(04:36):
trying to figure out how I wasgoing to buy a house someday.
And I just happened to take anight class at a college and the
gentleman that was teaching itwas teaching basically how to buy
houses.
But then he did one week thathe did the financial calculator and
another week that he didbuying notes.
And I just thought that wasthe coolest thing ever because I'm
just like, wait a minute, Ican own the property, own the cash
(04:59):
flow and not the property, andnot have to worry about all the other
stuff.
So kind of just declaredmyself in business and spent a month.
Yeah, yeah.
So I spent $6,000 on a faxmachine and a computer that probably
wouldn't even run to this day.
Yeah, 92, 93.
And so, yeah, so then I, he,he taught me and I, I found my first
(05:22):
note and flipped it and I'mlike, oh my gosh, I just made more
money than I would make inthree months on one transaction.
And I never left my apartmentwith a bowl full of pizza rolls and,
you know, whatever.
So I'm just like, this is the,this is great.
So then I just decided to keepdoing that and I did that and eventually
I ended up being hired by theinvestor side because they wanted
somebody that, you know,experience on the outside and what,
(05:43):
how, you know, kind of brokersthought and the referral mentality.
And like Tracy said in 97, wejust kind of said, you know what,
we're Going to go our own way.
It was a little bit of aconflict of interest for us to be
able to buy notes.
When we worked for anInvestor, they're buying $10 million,
$12 million worth of notesevery month of private notes.
And so we just said we'regoing to do it ourselves.
We wanted the flexibility andbuilt the business that way.
(06:03):
And it's been awesome ever since.
I can't fathom just goingthrough a note transaction back in
1970 or 80, because pullingtitle, like getting a BPO or eyes
on the property, it's like,you know, you got to call somebody
and then like, how do you getthe pictures to you?
You know, like, you know, lookat, I mean, out of state investing
(06:27):
back then would be, you know,so chaotic.
Yeah, yeah.
It was a lot of, you know, Imean, the big thing really was like
the inspection of a propertythat was, you know, an appraisal.
You know, in the transitionfrom appraisals to BPOs and then
BPOs being in a professionaldrive by way, that worked for us
that, that sped things up.
There's been a lot of advances.
We both have been in this over.
(06:47):
Over 30 years.
There's been a lot of advances that.
I hate to be that kind of oldguy that's like, you kids don't know
how good you have it startingout today, but then don't.
But, you know, but, but you do.
You do.
There's a lot of, like, youknow, we didn't have a T value.
We didn't have, you know, we, I.
Mean, you know, so now thebeautiful thing about the no business
because we've embracedtechnology, is we can do it all online.
We can scan.
(07:08):
It's amazing what we can dobecause we can do it from anywhere.
Right?
You don't have to be located.
You don't have to berestrained by fax machines and overnight
services.
So we love the no business.
It's.
It's a.
It's changed over the years,but many of the same things hold
true.
You know, you got to reviewyour collateral, you got to review
the documents, you got to knowyour borrower, you got to know the
(07:29):
state laws.
And so that's what will bringto the paper trail, how to work with
those seller finance notes.
Because I know you're doingthree different tracks and seller
finance being one.
And that's the beauty of thenote business.
You.
You can come at it fromdifferent angles.
So people are usuallysurprised that there's 30 billion
with a B dollars of sellerfinance notes created every year.
(07:50):
So That's a lot of inventory.
They're all not buyable, andall those sellers don't want to sell
them.
But there's a lot of inventoryout there.
Yeah.
And each asset class that, youknow, everyone plays in, people got
to realize it's either a B ora T in regards to billions or trillions
of dollars in the space.
So that's where I think a lotof people in this space, it's very
different than traditionalreal estate investing because there
(08:14):
everybody is fighting over thesame properties are the same thing.
In the note space, people havevery different buy boxes or where
they're looking for and so forth.
So it's much morecollaborative where it's like, oh,
I got this.
Oh, it might not fit me.
But, oh, maybe you reach outto this person because they buy in
this location, the state, orthey do that type of deal.
Interestingly enough, somebodysent me a pool of loans the other
(08:38):
day, and one of them wasactually a wrap.
And I was like, whoa, I'dnever seen a rat before.
So it's kind of, you know,like, remember the first time I ever
saw the washing machines that,you know, would go in circles versus
the top load?
I'm like, well, that's pretty cool.
So I'm reading the documentsto try and understand it, because
I had never seen one.
And then, you know, Imentioned somebody.
I'm like, oh, I know somebodywho does tons of these.
(08:58):
These and, you know, sent itto them.
And I think he might actually,you know, be buying it and, you know,
he's thankful, so.
Absolutely.
One of the things that we loveabout this site, at least the note
side, is that, you know, over30 years kind of proved what.
What we already knew becauseit existed before us.
Us.
But it works in any economy.
You know, there's.
(09:18):
There's, you know, sometimesthe stock market's hot, and then
sometimes it's off.
Sometimes the real estatemarket's hot, and then sometimes.
Sometimes it really cools off.
And the note space is always worked.
For us, the only differencebetween a good and a bad economy
is who we're buying the notesfrom and who's creating the notes.
If the economy is going goodand people are selling off things
and creating notes becausethey want to, you know, they want
to sell their note to get intoanother investment.
(09:40):
If the economy's not goinggood, if it's.
If it's tightening up a littlebit, then they're selling notes because
they're trying to, you know,pay off things.
And then there's always the.
You Know, life happens, right?
You know, I mean, somebodycarries back a note.
It's a great idea.
And now I want to pay for mykid to go to college or I need medical
bills or pay taxes or travelaround the world, whatever it is.
So we have seen.
You know, everybody asks, doyou get concerned about the economy?
It's always an annual thing.
(10:01):
It's like I'm concerned from apersonal standpoint.
I'm concerned for me and myfamily, my friends.
Am I concerned about my business?
Not really.
Matter of fact, if anything,more notes are typically created
in a bad economy than they are.
But as Tracy said, it's a $30 billion.
So maybe one year is 27billion and the other year is 33
billion.
Well, guess what?
(10:22):
I don't buy any more notesbecause of that spread.
I mean, it's already more.
Yeah, no, and it's interestingtoo because a lot of questions we
hear a lot are about likeinterest rates and like how interest
rates and you know, interest rates.
For example, in my mind, withseller financing, as they go up,
then you probably see moreoriginations because people, you
know, will rather go throughthe easy process of originating when
(10:44):
interest rates are down.
Like you mentioned, Fred,people might be selling because they
might be trying to take, takethat money to go invest it or leverage
it for something else.
So there's always a, you know,this, you know, reasoning why.
And again, like real estate,traditional, when prices fall or
something happens, people justget very skittish.
(11:04):
Or like today when people areusing leverage like, oh, the rental
numbers don't work or whatnot.
Notes always work and youknow, and that's what?
At the right price?
At the right price, Exactly.
But I mean, I have never had asituation where it's like, oh my
God, I can't find any notes.
Like you said, we're talkingbillions of dollars.
(11:25):
Now.
Pricing might adjust or, youknow, things might change or it might
be a little slow one month.
But still there's alwaysplenty of opportunity for people
within the space.
Absolutely.
And if people don't want tobuy existing notes, they can create
their own notes.
With seller financing.
We see a lot of landlords whoare tired of being landlords with
(11:45):
taxes and insurance going upand tenants and so they are ready
to turn some of thoseproperties into cash flowing notes,
let somebody else maintain theproperty and pay the taxes and insurance.
So we're seeing a lot ofinterest in people creating notes
through seller financing.
Also using the wrap strategyyou talked about because they can
wrap around, you know, that 3and 4% debt that's out there and
(12:05):
they can charge 8 or 9%.
And those numbers work even ifyour property value hasn't gone up,
as long as you're a borrower,is good quality borrower.
So there's lots of greatstrategies that you can use in the
no business.
It's not just to buy a note.
Yeah.
And I think there's a natural evolution.
There's no barrier to entry.
So if you come into theindustry like I did, I didn't have
any of my own money to buy notes.
(12:27):
I learned how to refer notesto somebody else.
So once I learned the process,I referred them on to somebody else
and I got a nice fee and I get2, 3, $4,000, whatever I got for
referring the note.
And then you build enough ofthose, then you start owning pieces
of notes.
There's great strategies whereyou use somebody else's money to
buy a whole note, but you onlysell part of the note.
Now you own a piece of noteand then you eventually start buying
your own notes and start, youknow, small notes and then bigger
(12:47):
notes and then do it them outof your, you know, self directed
IRA or you turn to Chris andyou start a whole fund.
Yeah, I mean so there's no,there's this path of entry that goes
through that.
It's just, there's no barrierto get in and I don't know another
word, another financialrelated element where I get to set
my parameters.
I go if my hot button is whatstate it's in or my hot button is
(13:08):
the return or my hot button isit has so much equity, I, I choose
those parameters, know whetherI want to buy the note or not.
So one of the things that youknow, I appreciate and have the utmost
respect for the two of you ontoo is you teach people how to do
it the right way.
Because there is a right wayand wrong way.
And I'll just share an exampleof I received a pool which is a list
(13:31):
of loans the other day thatwere seller financed, that originated
and one of them that wasoriginated in 2023 and on the note,
you know, it was their own note.
It wasn't like a standard note.
They created their own notefile which actually they called it
a loan agreement, but it wasactually a note.
But I'm going through it andthen all of a sudden on like the
(13:53):
second page it had like allthe payments that they made, I'm
like wait a second, how.
And then at the bottom is aperson signed it from like three
years ago.
How did the I'm like they justbastardized and like changed like
the note and just stuck in thesignature page.
And I'm like, you can't dothat because it was a line of credit.
(14:16):
So they were putting like allthe draws in there that they already
did for like the last yearbecause the balance was supposed
to be like a million andthey've drawn like 800,000.
But they went and they put itin there and they're like current
payment amount owed, like onpage two of the loan.
And I'm like, how did theyknow what that was today?
How did they know in 2023 whatthat is today?
Time travel.
(14:37):
Time travel, Exactly.
And you know, they literallyjust, you know, bat.
And I'm like, okay, this makeszero sense.
So I'm like, I'm gonna pass onthese because like, does the borrower
even know they have this loanor what is, you know, did they actually.
Is that a real signature?
And you know, you, I sharethat story because you, there's a
(14:59):
right way and a wrong way andif you don't do it the right way
or you try and take someshortcuts on things, that's the one
area in this business that Isee where it can be catastrophic.
Someone asked me yesterdaylike, oh, do you ever lose money?
I'm like, yeah, we've lostmoney, but we've never had like a
massive loss and on things andso forth.
And they're like, well, I hearpeople do it all the time and I,
(15:20):
or do that.
I'm like, yeah, because theyjust don't follow the steps and they
take the shortcuts.
And now I'd love for you totalk a little bit about more, kind
of about the programs that youguys have as well and some of the
things that you've done in thecommunity you've built for people,
for investors.
Yeah, we found there was areal need for approachable, affordable,
(15:43):
hands on education.
And so after doing it for thatmany years, we decided to share that
knowledge.
And so we do trainings and wehave a membership and a community
and it's just a great way forpeople to come together.
Like you said, some people buysome kinds of deals, some others
so they can collaborate inthose methods.
(16:03):
We, we don't try to sell orbuy notes from people.
We want to just stay 100% educational.
We still buy and sell notes,of course, but our intent is really
to help them look for thethings we would look for if we were
purchasing a note.
And so we use a lot of my, mybackground's title and closing and
documentation.
And so we.
I'm a big checklist person andit was my job to hire and train the
(16:25):
people so that more peoplecould review files for that institution.
We had to make them quality,that we could securitize them.
That's no easy task withseller finance notes.
And so that I really likesystems and checklists and so we
share a lot of that withpeople in our memberships.
Yeah, I mean it was kind ofthat we entered into that about eight
(16:46):
years ago was kind of thatgive back stage a little bit where
you know, we just slowlybuilt, you know, we were asked to
do it earlier and we reallydidn't and we just thought, well
okay, let's, what would itlook like?
You know, now we have a littlebit more time.
So we built this wholecommunity that we have members that
join.
Like Tracy said, we didn'twant it to be a lot of money for
anybody.
We didn't want anybody tothink about, you know, you know how
(17:07):
it is.
So we, we basically supplied,you know, a bunch of videos.
We've got over 500 videos inthe membership and then we've got.
They can contact us with ahelp desk and we'll mostly do a lot
of deal review or we do mini camps.
We'll do like little mini camps.
Tracy did a marketing minicamp for five weeks.
I've got one on AI coming outthat we're doing together.
So it's very hands on, it'svery interactive.
(17:27):
They work with each other.
Like Tracy said, we won't buya deal from a member just because
we feel like it's a conflictof interest.
I can't give you good adviceand also be buying or selling deals
from you.
So our opinion, other people.
One thing we, we definitelywill be sharing at Paper Trail is
our due diligence checklistbecause I'm a big firm believer in
those checklists.
And you know, that's somethingwe'll be sharing with people in our
(17:50):
sessions just for being thereand, and you know, that's.
We've got 13 questions wethink you should have answered on
every seller, finance note you buy.
We talk a lot about if webelieve, if you want to be the bank,
because that's the thingeverybody talks about, be the bank.
I'm like, okay, you want to bethe bank, then you need to act like
the bank.
So you need to have systemsand processes and checklists and
(18:13):
use the right documents andnot get cheap and not.
And avoid title and avoid attorneys.
I know none of us like to paymore than we want to.
But those pieces are veryimportant part of the process.
I think we've had the samething, like Chris said.
I mean, you know, people askus, will, you know, don't you have
really big losses and stuff?
I'm like, my big losses isthat, you know, we own several tracts
(18:34):
of land in Tampa, but I own the.
Own the land or I have ahouse, you know, I lost a couple
thousand dollars becausesomething went wrong or whatever
like that.
If you buy it, right.
If you go through those checks list.
I mean, most times sometimeswhen we see somebody after the fact
that's already done a deal andwe're doing a deal review and go.
I mean, we may.
We don't point it outnecessarily right out of the gate,
but just like, you can see anobvious corner they cut or whatever.
(18:56):
And, you know, this industryis not that hard.
Just go through the list.
Take the time.
Go through the list.
Don't cut corners.
Because somebody said, hey,don't worry about it.
The value is really there.
Don't assume the value is thevalue that somebody told you.
Yeah.
And so, yeah, it's alwayslike, oh, yeah, don't worry, it's
gone up $100,000.
Sure.
You know, at least.
Oh, they're putting out.
And it used to be the waysthat, oh, they're putting a.
(19:16):
A Buc EE's or a Walmart acrossthe street or, you know, a new speedway,
you know, like, don't worry,it's vacant land.
It's fine.
You know, so there's achecklist and we, we share if we're
guilty.
Not guilty of one thing.
I feel like it's thatinterview where it's like, tell me
your, you know what, you know,what is.
What are they detail oriented?
Detail oriented.
You know, those interviews you carry.
(19:37):
Yeah.
But one thing we do, one thing we.
We've never.
Of everybody that's comethrough there.
I mean, no one is ever accused of.
Of not giving out enough information.
We share everything.
You know, just why not?
I mean, at this point, yeah,we're the same way.
And it's interesting.
I look at checklists and, youknow, and this is a.
Probably a bad referencebecause of what happened yesterday,
(19:59):
but it's almost like anairline checklist of going through
everything before you take off.
And people like, I had a womanwho invested with me in the past
and she wanted to go buy herown loan.
And basically I'm like, hey,I'm happy to help you out with due
diligence.
Do whatever.
She's like, no, It's a seller finance.
It's a C1, I'm just going togo buy it.
(20:20):
So she went bought it $40,000in Detroit.
Somebody seller finance it.
She bought it from them somecompany at 12%.
Well then basically she bought it.
She didn't collect one payment.
It was always non performing.
The borrower was a selfdirected Iraq owner.
So there was no recourseoutside of that.
(20:41):
She finally after three monthssent somebody by the property.
The property was boarded upand had like big holes in the roof.
There was like $9,000 in taxesowed on the property.
There were fines, there was everything.
And then she called me and waslike what do I do?
And I'm like just walk away.
I'm like there's nothing.
She.
So then she talked to anattorney about foreclosing and I
(21:03):
told him that property, that'swhat it is.
I'm like do you want to own that?
Because then you're going togo spend.
It was in Michigan which you can't.
You only get 75 bucks fromyour attorney fees to foreclose.
The attorney fees aren'trecoverable and you still tax is
going to get paid first.
And I'm not even sure youwould get above you'll own it and
still you know like oh thetaxes anything.
(21:25):
I think it sold for somebodybought it.
So she's like I'm just goingto go and bid like a thousand at
auction.
I'm like then why even botherbecause you're spending it sold for
like $3,000 at auction.
So not only did she lose herinitial 40, she lost another several
thousand dollars in going to foreclose.
But all of that could haveeasily been avoided because every
(21:46):
single note, I don't care whois buying it, you know you need to
confirm title and visuals on that.
Did she literally skip every step?
She literally skipped everysingle step.
And it was a company thatoriginated notes and sold them to
people and like oh, we've doneall of this for you.
And that is when anytimeanybody says we've done this for
(22:07):
you, do not believe them.
No.
Run away.
Yeah.
Just so people listening.
There's ways that she couldhave known that up front and that
is to order title and to getvisualized in the property some kind
of property condition reportor BPO or drive by appraisal.
You can check tap your titlereport will check taxes but you could,
you.
Can check taxes online, youcan google.
(22:29):
That before you even get tospending money on titles.
So there's all the ways to do that.
We, we Just never skip those things.
It's just we've been doing allthis time and we don't think we're
smarter and that.
So smart we can skip those things.
You just can't.
You just don't know what'sgoing to turn up.
Nope.
Yeah, you always.
Again, there's a checklist andit's just, just go through it.
And you know, some of thestuff is repetitive and a lot of
(22:51):
times, like I had one,interestingly enough this past week,
it was a property and thereare two properties with the same
address, interestingly enough.
And the same lender had giventwo loans on each property.
So it's like, what?
You know, and then which onewere we buying?
(23:11):
So we had to go back to thetape because they had different loan
amounts.
But all the data they gave uswas from the other one, not from
the one we were actually buying.
So it was just.
Now we're talking internally.
It's like, that's like an easything that honestly could have got
missed.
But we have a checklist thatis make sure the tape original loan
(23:32):
amount matches the loan amounton, especially on non performers
like that.
It's like, wait a second,those didn't match.
Is this the right loan?
Because you want to make sureyou're buying the right loan that
was on the tape.
Yeah, well, that's all thesort of things we'll all be sharing.
I know.
And all the different tracksof things that are the obvious gotchas
that you can easily avoid andeither find out and fix it or find
(23:56):
out and say, yes, move on toanother one pass.
So I mean, you work with a lotof people and you know, we talk about
checklists and doing thingsand stuff.
And you may have answeredthis, but I'm just curious too, you
know, as people who arelooking to come here, what are like
one mistake or several mistakes?
Sometimes you see newerinvestors make that, you know, also
(24:19):
try and help them avoid.
You know, I'll say outside ofbasically following that checklist
because that's kind of Rule 101.
So outside of the checklist,which is the due diligence thing,
like, so we give away thatlist and here's what you need to
do.
I'd say one of them is peoplegetting kind of yield drunk where
they're so focused on, youknow, they heard in their head that
(24:39):
they're going to get a 15%return or 14% return or 18% return.
And so they, they, they just,they obsess over that number.
And so, you know, Walt, Walt,poser A good friend of ours from
years ago would tell us, look,you know, if the deal's not good
at like 12%, it's not betterat 18% yield does not make up for
risk.
It doesn't make the deal better.
(25:00):
It doesn't sweeten the pot ina way because zero percent of zero
is still zero.
If you don't get paid, then itwasn't a good deal.
So.
Or 20% or 20% not made up.
So, so if you, if you focus on that.
So we've seen a lot of peopleand self directed IRAs are a very
good example of this.
People will sit on moneyearning absolutely nothing forever
(25:21):
to find their dream.
14, 15, 16, 18 deal becausethey saw a case study where someone
did something as opposed tobuying a solid, sleep at night, earn
10 on your money, 11 of money,8% on your money.
We buy deals at 8.
I mean, if it's a, literally,you know, it's a super low ITV and
good credit and everything onthe check, why not?
I don't even have to worryabout that.
(25:42):
So I'd say that's one mistakeout of the gate.
I'd say people do.
What do you think?
I agree with that.
I have sadly helped a lot ofpeople lately who bought a note before
they'd come to us.
So they, they did not gettheir assignment recorded, they did
not get the original note,they didn't get an endorsement.
(26:05):
And now they're trying toenforce and they can't.
And I just, I've seen thathappen like three or four times.
And I'm like, who did youtrust to do all that?
Oh, we trusted the seller toget it recorded.
Don't do that.
You know, just, just take careof it.
Nobody, nobody treats yourmoney like you do.
Nobody cares about it as muchas you do.
(26:26):
And so if you don't want to doit yourself, then, you know, work,
hire a third partyprofessional that you're paying to
do that, to look out for your interest.
So I've been surprised by that.
Like.
Huh?
They did what?
And so don't.
Yeah, just don't cut the corners.
So it's interesting, Fred,because I had this conversation with
somebody the other day andthey have like $30,000 to invest
(26:49):
and again, they're trying tofind that perfect deal.
And I'm like, do you realizethe difference between 10 and 12%
on 30,000 is like $600 a year?
It's $50 per month.
But the fact that you wait anextra six months, you're probably.
Or longer or longer.
And my wife is in finance andshe's made this comment to me in
the past because I always talkabout, oh, target yields and stuff
(27:11):
like that.
She goes, can you go open yourbank account and show me, show me
where it says in your bankaccount yield.
No, it shows a dollar value.
It's like it's all about howmuch you make.
You know, you want to targetyield, but at the end of the day,
you know, it's always abouthow much money are you making.
The yield is kind of thereflection of that, but at the end
of the day it's, you know, howmuch money did you make?
(27:33):
And if you're making on 30,00010%, you're getting $3,000 per year,
which, hey, look, that's, youknow, decent money compared to, again,
based on the risk, if it'ssecured asset with good equity in
it compared to some of theroller coaster rides you do on the
markets or other types of investments.
So, yeah, I think peoplefighting for every dollar.
(27:54):
Yeah, we're concerned, I wouldsay we're fairly conservative.
We tend to pick, you know, wewant, you know, better credit if
possible.
Is the noise guy.
We want to see, we want to seemore equity in the property.
Then we, the, the numbers havestatistically proven that there's
more equity in the property,the less there is a chance of you
ever getting that property back.
So we tend to lean towards that.
So, but you know, you, we getearly payoffs and you know, things
(28:15):
along the way that spike it up.
But you get to choose whatyour hot buttons are for sure.
Yeah.
I think there's a common sense approach.
Sometimes people, especiallyif they come from a technical background
analyzing a spreadsheet, thatthey need to step back from the spreadsheet
and just look at the deal.
(28:36):
Like, does this deal makesense and does this really, I mean,
how many strikes against itdoes it have?
I mean, if the borrower, dothey have equity, do they put down
payment?
Have they been making payments?
Is the property in good condition?
Is it a state that's easy todo business in?
I mean, pretty soon if they'reall like negative, but you've got
a great yield.
Ah, does this, does this dealmake sense or does it make sense
(28:59):
that the, the borrower wouldhave that money down, that they say,
maybe you should verify that?
I think sometimes people lookat only the numbers and they just
need to step back a little bitand just say, in a, in a normal world
where I was having aconversation with somebody, does
this sound like a good deal?
Or does this make sense to me?
We do that.
We do that all the time.
When we're looking at dealsfor ourselves.
(29:19):
We're just like going through,you know what, you know, like, I
don't.
Is this worth it?
Because Chris, you said itearlier, it's like there's a, there's
a ton of other deals rightbehind it.
So it's like, if you don'treally feel good about it pretty
early on, probably better just walk.
Don't be afraid to walk away.
And I guess that's anotherthing, you know, don't be afraid
to walk.
I will say one more tip that Ithought of just now.
If somebody buys a deal and ifit stops paying, don't sit around
(29:41):
and wait six months, ninemonths for them to get back on track
and stuff like that.
You jump on that right away.
Because we've dealt withpeople, members that'll call us and
go, I've got this deal, canyou help me?
When do they, you know, theystop paying?
I'm like, when do they stop paying?
It's like, oh, last January orsomething like that.
And like, what have you beendoing all this time?
Well, nothing.
I talked to him once and theysaid they were going to try and get
back on track.
It's like you need to.
(30:01):
There's a procedure, there's achecklist of what you do when someone
stops paying.
Yeah.
And works through yourservicer, of course, because there's
laws and rules and regs on that.
Otherwise it ends up onChris's side and it's a non performing
loan, guaranteed.
And you know what, the firstthing I'm going to do is going to
my attorney and say, send thatdemand letter.
And anybody ever buys nonperforming, I'm like, it doesn't
matter if they are thesweetest person on the planet.
(30:23):
You start the process becausethen it, then it puts a time frame
to get a resolution to it.
It's not personal, it's business.
No, exactly.
So, so without spoiling allthe great content as we wrap up this
episode that you're going tobe, without spoiling everything that
you're going to be doing atPaper Trail, what's one thing you
hope attendees, you know,learn or think differently after
(30:45):
hearing or attending event.
I hope they come away and theyunderstand a partial purchase and
a hypothecation because it'svery powerful that you can leverage
your money.
I hope they come away and knowthat they can do it too.
No matter where they are at intheir journey, whether they're trying
to level up or they're justtrying to get started, I think they'll
(31:06):
find everybody there is very approachable.
I think I want people to bemotivated, but even more so, I want
them to have a plan forthemselves when they walk out.
So if they already have anexisting business, this is how they
have the tools they need toget to the next level.
If they're new to thebusiness, they feel like there's
a path in front of them tofollow and start succeeding and begin
(31:28):
their journey in this business.
So not just a, hey, we're all motivated.
We're coming off a TonyRobbins thing, which, by the way,
I like Tony Robbins, he's fine.
But we want, we want.
I want you to walk.
I want you to walk away with action.
I want you to listen tosessions because you learn.
I want you to participate andhang out during a cocktail party
or a coffee party.
What I say today deals.
Deals like caffeine and cocktails.
(31:50):
So just, I mean, just learnall you can, but more importantly,
not just have those thingsbecause some people get stuck in
a learning mode over and over again.
Our focus on our track, Ithink, is, yeah, we've got a lot
to teach you and a lot you canlearn, but if you don't do any action
with it, doesn't do any good.
So I want to focus on theaction aspect of it, give you tools
that you can put into action.
Awesome.
And that's really a big focusfor everyone who's at this event,
(32:13):
is to give people tools,timelines, guidance, whether you're
a beginner or you're advanced.
You know, to bring up the nextlevel and provide people that great
content.
Well, friend Tracy, thanks forjoining me today.
For everybody, the PaperTrailconference is September 18th to 20th
in Chandler, Arizona.
You can go topapertrailconference.com to get your
(32:35):
tickets and people want toreach out to you, learn more about
your programs and everythingyou do.
What's the best way for themto reach out?
Noteinvestor.com I think isprobably the easiest you can get
on the list there for content.
There's over 500 probably freearticles on there.
And if you're stuck, there's aContact us and believe it or not,
we actually respond personally.
(32:56):
So there you do.
How long have you had thatdomain name?
You must add that for a while.
2000.
Yeah, 98.
Yeah, we went on some domainbuying sprees there for a while.
We do feel fortunate to havenode investor.com, yeah.
Okay.
Just for the record, when westarted the domain.
I started buying a lot of domains.
Trey's like, stop buying domains.
(33:17):
Why are you buying so many domains?
And then, like, I stopped.
And then five years later,she's like, why aren't you buying
more domains?
I know.
I'm like, some girls like diamonds.
I like all these domains.
Someone had one the other daythat was actually not a bad domain,
but they reached out to meand, oh, no, it was actually, no,
it wasn't domain.
It was.
It was like a Facebook groupor something.
And they asked me about it,and I was like, looked at it and
(33:39):
it was like six months old andhad like 6,000 people.
And it was public.
But I'm like, yeah, that'skind of one of those groups that,
you know, basically, it's likegetting YouTube views, or if you
hire somebody to give you,like, YouTube views, it's like, oh,
we'll just have the botsoverseas just, you know, get you
and stuff.
We're real.
No bots here, but we are Investor.com.
(34:00):
singular.
No s on the end that somebody else.
If I had to do it over again,I would have bought both domains.
Yeah, we didn't think of that.
We never thought about that.
So node investor.com and we solook forward to seeing you out in
at the Paper Trail conferencethis fall, Chris.
So thanks for hosting it,thanks for.
Listening this episode, andfriend Tracy, thanks for joining
(34:21):
and we'll see everybody in September.
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