In this Know Your Speakers episode, Chris talks with Melissa Palmer—former federal agent turned due diligence expert and founder of Capital Verified. Melissa shares how a personal experience with investment fraud pushed her to create a service helping private lenders and note investors avoid the same fate.
Melissa discusses how she repurposed her background in criminal investigations to vet borrowers and deals, what most people miss when reviewing investment documents, and why it’s not just about spotting red flags—but understanding the yellow ones too. She opens up about lessons learned from owning rentals, getting scammed, and building a business that helps protect other investors from similar pitfalls.
Melissa will be taking the stage at the 2025 Paper Trail Note Conference to go deeper on risk, verification, and the overlooked areas of due diligence that matter most—especially as more investors shift into private lending.
🎟️ Join us live in Chandler, AZ, September 18–20. Reserve your seat at papertrailconference.com
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:45):
On this episode of the PaperTrail podcast, we speak to Melissa
Palmer of Capital Verified.
This is an interesting andgreat episode because she provides
due diligence services forprivate lenders and other note investors,
which I didn't even know this existed.
And when we heard about thisservice, we wanted to make sure she
(01:08):
would be speaking at the papertrail conference September 18th to
20th in Chandler, Arizona.
So hope you enjoy this episodewith Melissa, who is a former investigator
as well.
So thank you and enjoy.
(01:29):
Hey Melissa, how are you today?
Hey, doing well.
How are you, Chris?
Good.
We were just talking offrecording about a little busy for
a Friday today before holiday weekend.
But all is good.
So why don't we just kind ofroll right to it and have you start
with telling people a littlebit about your story, what you do
(01:53):
and how you got into yourbusiness because it's really creative.
Thanks.
Yeah, so I'm originally from Wisconsin.
I joined the air force in 2007and I quickly started using my VA
loans to get into investingjust as a, a buyer, you know, primary
(02:14):
property buyer originally.
And I like to say that I'vegone from like the HGTV mindset,
maybe grown to a little bit ofbigger pockets mindset even though
I never knew it was a blog andyou know, got into the kind of creative
finance realm and thenrealized, you know, there's, there's
so many ways to make money andthere's a lot of ways to lose money.
(02:37):
So I kind of leveraged mybackground while I was in the Air
Force.
I was a federal agentconducting criminal investigations.
And so with all the ways tolose money, I saw an avenue to help
people avoid fraud.
You can't prevent it, but help avoid.
(02:57):
So kind of repurpose thoseinvestigator skills as a due diligence
consultant of sorts.
So yeah, I saw you know yourwebsite and stuff provides due diligence
services for the privatelending, but I'm guessing like I
invest in non performing loansand other things.
Pretty much you could providea service to anybody would be my
guess.
It's more you're really justdoing that due diligence, which is
(03:21):
I think the most importantthing in any type of investing space.
For sure.
Yeah.
It's kind of like applying theappropriate tool for the job.
You're not necessarily goingto use a hammer drill on a two by
four, but um, the at the endof the day due diligence can be done
so many different ways andthat's kind of why I niched down
(03:43):
into the private lender space.
Okay, now you mentioned alsothat you've owned some rentals and
so forth as you startedgetting investing, just curious where
your portfolio and have youcontinued to grow that as well or,
you know, how's that looking today?
Yeah, so it's primarily in BigBear, California.
I've got a triplex, a shortterm rental, um, and a dirt lot that
(04:07):
I'm developing, a commercialdirt lot.
So I've got a couple otherrentals in west Memphis, Arkansas
and those were non performingpartners which I took over the properties.
So I don't want those.
But they were a consolidationprize for the capital that I wanted
back.
Right, okay.
(04:27):
So you're developing.
That is awesome to go fromwhere you are to, you know, development.
I come from a background ofdevelopment and construction and
everything.
So every time I hear that.
And actually today I sent ourteam pictures because we have two
properties that we took backon non performing loans that we're
renovating them.
(04:48):
And I sent some pictures ofthe renovations and in the blurb
I'm like, I know I'm the onlyone who enjoys seeing like framing
going inside a house or likesiding being completed, but this
is my joy and excitement.
So great.
What's, you know, somethingabout your journey that most people
(05:08):
don't know but probably should.
Yeah.
So people think I got into thedue diligence because of my special
agent background, but reallyit's because I got ripped off.
So I got invested into a totalPonzi scheme, Robin Peter to pay
Paul based off ofrecommendations and a very expensive
(05:29):
paid community.
And at the end of the day Irealized if I could fall for this
stuff as a, as a formerfederal agent, others could tune,
especially new investors.
And so yeah, that's, that'sthe, you know, full.
I won't say it's the realstory because they're both part of
the story, but it's the fullpart of the why I got into this.
(05:53):
I'm guessing you probably didyou beat yourself up a lot saying,
I can't believe I fell forthis because this is my background.
I should have and likerecircle yourself a thousand times
through the steps of like, youknow, everything.
Unfortunately.
Oh yeah.
Reliving every moment where Iwas like, I asked for that information,
so good job me, I asked for it.
(06:14):
But they didn't, but theydidn't provide it.
Right.
So it's the person, theproperty, the proof.
Right.
They can give you furnish allof this information, but if you're
not verifying it, there'sreally not a whole lot of security
there.
Right.
And so I like to say don'ttrust, verify.
A lot of people will like tolean in with trust, but I think when
financials, you know, whenthere's financial outcomes, you really
(06:38):
want to verify those figures.
And if at the end of the dayit's a lot of dreams and not reality,
I'm not saying you can'tinvest in those.
I mean, in developmentespecially, I mean, I'm developing
in a very rural area of BigBear, California.
So it's like, you know,there's, there's a little bit of
dream and, and chance that cango into some investments, but just
(06:58):
knowing, you know, actuallyhaving the information to make an
informed decision is reallythe most important part.
Yeah.
Because there's a very bigdifference between a deal going bad
and having risk and a dealwhere it's just fraud.
And you know, and sometimesthose deals end up going bad that
turn into fraud where peopledidn't have that upfront.
But then there's deals that.
(07:20):
Interestingly enough, I didnot know this.
I'm curious if you did.
So we are, you know, have,There's a software that was sharing
with us that they have asystem that does like OCR and scanning
and they mentioned that theycan easily tell if a bank statement
has been modified becausebanks actually have their own font
(07:40):
and font size that is onlytheir own specific.
So like if you took like a PDFeditor and like tried to change a
number and so forth, the fontand font size by each bank is specific
only to that bank.
So these OCR systems caneasily pick that up and note it,
flag it.
And we were getting ademonstration on this because again,
some of the fraud is when yougo to lend to people, they say they
(08:02):
have this much in the bankaccount and there's plaid and stuff
that can adjust, but a sixmonth old bank statement, you might
not be able to, you know, seeor know.
And they were, you know, andthey were telling me about this,
I'm like, wow, it makes somuch sense.
But I'm like, I never knew that.
Yeah.
And like plaid is a wonderful,a wonderful way to actually integrate,
(08:23):
not even have to look at documents.
Right.
But at some point when you'rejust doing the preliminary scan,
you're not trying to make it acomplete chore for a borrower too.
And so it's easy to kind ofget by with the lowest threshold
documentation available andthen kind of just proceed down that
route.
Yeah.
And like you mentioned, a lotof times most people like to think
(08:47):
people are trying to do good.
So you put A trust in themwhere, like you said, don't trust,
but verify.
I've never heard that.
And I actually like that.
You know, it's usually thetrust would verify.
Right.
So, you know, everybodytypically has a core investment philosophy.
If you could describe yours inlike, one or two sentences.
(09:07):
What's your philosophy andwhere did it come from?
Huh?
Well, I would say it's thedon't trust verify that's kind of
like.
That is.
I mean, that's a greatphilosophy, honestly.
I mean, I.
I would roll with that.
That's actually a great one.
So.
And I think, you know, just to.
So I'm not copping out with myprevious, you know, offering is,
(09:32):
you know, I think.
I think investing with valuesis really, really critical.
And I'll say I'm, you know, Istarted investing in 2009, but it's
very.
Been very slow and I had.
I'd, you know, don't have somemassive portfolio.
But I will say I did findmyself chasing investments such as
(09:53):
the Ponzi scheme that I foundmyself in that really didn't align
with my values or interestsbeyond returns.
And so, you know, part of thatdon't trust verify is like, not investing
in the returns, investing inthe information, and actually making
that sure that informationaligns with your goals and values.
(10:14):
I think so.
So many people will just lookand chase a number and not understand
what's behind that number.
And we run a fund and, youknow, we target 8 to 10% of people,
and some people just laugh atus and like, oh, I see deals at 25,
and I'm like, that's great.
But how did you really.
Are people really getting 25%?
(10:34):
So.
Right.
Yeah.
What's the percentage ofdefault rate on those 25% opportunities
you have?
Yeah, well.
And kind of you might beanswering the questions ahead each
one.
But, you know, what's oneprinciple you live by in, you know,
your business that guides howyou treat just the people around
(10:54):
you?
Yeah.
So for principles, I like toborrow the stoic philosophy, like
the stoic virtues of courage,wisdom, justice and temperance.
I feel like those are justlike a very solid foundation for
me then building upon withthose values and then the ending
(11:14):
goals.
So, yeah, no, great.
You know, we have you as aspeaker at the paper trail conference,
I guess.
You know, why is it importantfor you to, you know, be a part of
a conference and speak andprovide, you know, a session for
people?
Yeah.
I think especially with shifts.
Right.
If people are shifting frompaper notes to maybe more private
(11:38):
lending, I think in thoseshifts is where we can find ourselves
in just suspended in this verybrief period of vulnerability where
we're trying to apply skillsin one area to another area and they
don't always translate.
And so I think it's veryvaluable to have these upfront conversations,
(11:59):
talk about the risks that andrewards, talk about the disclosures
and you know, industry practices.
And so yeah, that's, that'skind of where, where I feel excited
about that.
No, and I like to kind of usethe analogy.
Sometimes it's like being a.
Again, if I'm not saying it'sthe same in any way, but it's kind
(12:22):
of like being like a doctor oran attorney.
Like there's different typesand just because you're an attorney
doesn't mean, you know, youcan do real estate if you're doing
corporate law.
And it's same thing in noteswhere yes, I could do seller financing
or I could do non performing.
But then when you shift overto private lending or try and mix
those, like you said, there'sthat moment of vulnerability where
(12:43):
you don't know what you don'tknow and you think you know sometimes
because you've already been inthe space, but you know, it's really
that area where you know, anda lot of times it's a, you know,
sometimes can be a very briefmoment in time, but it's still a
moment where you don't want,you know, all the cards come falling
down on you.
So yeah, I even think aboutlike the contractor that moves to
(13:06):
an investing fix and flipper.
So now instead of being thecontractor being paid, now you're
the one putting the risk up.
And they make differentmistakes than they'd make as an employee.
So even with that very closerelation, sometimes there's just
lessons to be learned in thatlittle gap.
No, I have a very hard lesson learned.
(13:27):
So I made the move from, I wasdoing construction management for
commercial large generalcontractor and then you know, we
used to call it go to darkside because I went to go work for
real estate developer and Iremember was managing a project and
one of the vice presidentscame to me and this was, you know,
15 years ago and you know, youknow, I'll say construction and development
(13:52):
being treated back then isvery different than today in regards
to some of the things and Igot completely reamed and the whole
sit down when I was with thisperson is you're thinking like a
contract.
They're not like a developer.
And it is two completelydifferent mindsets and shifts.
But I'll tell you just like,you know, you mentioned you've been,
(14:15):
you know, burned on a dealthat just kind of been like engraved
in me ever since on the differences.
Because as a contractor,you're just like, I'm getting paid,
I just want to get the job done.
Here's my scope of work.
And just I want to get done.
And the developer, your, hey,look what we got to mitigate risk.
You know, we want, you know,there's so many different avenues
and paths and things you haveto manage versus a contractor.
(14:37):
And that was really eyeopening for me.
So that is.
Sorry, I digress a little bit,but that's a great analogy without
spoiling the whole session.
You know, what's one thing youhope people can learn or think differently
after hearing from you?
Ooh.
Well, I think you're, youactually brought up some beautiful
(15:00):
points here where I think it'sjust understanding the different
lenses to apply.
Right?
So underwriting as a buy andhold investors different than underwriting
as a note investor or as aprivate lender on a fix and flip
versus a private lender on ashort term rental or getting some
of those more creative exit strategies.
(15:21):
So I think it's just allowingpeople to understand there's no rules.
There's art and it's not, it'snot rules in science, it's art and
craft and lenses to applybased on those risk tolerances and
outcomes desired.
And so just having a, maybe alittle more in depth conversation
(15:44):
because I know a lot of peoplewant a checklist and they want the
rules and, and maybe just kindof opening them up to the opportunity
to create their own left andright boundaries based on the lens
that they want to view aninvestment from.
I'm laughing because I had twopeople reach out to me and be like,
can you send me this checklist?
Can you send me this checklist?
(16:05):
And you know, I try and preach together.
It's a guide, you know, andjust because you check a box on something
is getting something is verydifferent than being able to analyze,
review it and know what nextquestions to ask.
And that's where, you know,it's hard because you need experience.
(16:26):
But it's also good to be atconferences and meet people like
you who can share theirstories and you know, can do this
kind of in your sleep andexplain some of these things.
So people, even if people justpick up one lesson from it, it's
again, it's movement towards growth.
So.
And you've probably workedwith, you know, all kinds of investors
(16:51):
in your mind when you look atsomebody and it's like, wow, that
person really knows whatthey're doing.
I, you know, look up to them,you know, what in your, you know,
what is there, you know, makesyou feel like they are like exceeding
or being, you know, in theinvestment world or space.
I think when, you know, andI'm, I'm going to preface this with
(17:11):
I'm an auntie, I'm, I'm not amom, but I, I do think I've got yard
kids.
So we've got a front lot,house, back house and in a shared
yard with my brother in lawand sister in law.
But when I look at investorsthat I really truly admire, they
still have a really close andloving relationship with their family.
(17:33):
Their kids still want to spendtime with them and vice versa and
not, not because of a neglectinvolved with that time that they
don't get, but just a true,meaningful connection with their
family.
Because it's, it's, I think alittle easier to be obsessed and
just build, build, build,grow, grow, grow.
It's probably a little harderto actually maintain a semblance
(17:58):
of reality along with that growth.
So it's, it's kind of a downto earth rich neighbor that you didn't
expect to have all that bankand property.
Yeah.
And it's all about balance,you know, and providing that, you
know, work life balance, whichI know a lot of people, you know,
always say there's no suchthing but you can have it.
(18:18):
And it's interesting youmentioned that because I know an
individual who, you know, hasgrown a company to, you know, start,
you know, in the billions.
And that person though gets upat 3:30 in the morning, goes to work
and is at work at like 5am andis always the last person to leave
the office.
And they've been doing thatfor 30 years.
(18:39):
And you know, question is, didthey ever see their daughters grow
up, go to their sports, go totheir games or did they just spend
it trying to build somethingwhere it's great that you can say
I built this humongousbusiness and people might respect
and admire you.
But for me personally, I am aparent of two kids and at the end
(19:01):
of the day I really don't carewhat other people think about me.
It's what my family does.
And somebody made a quoterecently and I forget who it was,
but they were in the newsgetting blasted for something and
their comment was like, I'llnever, I don't take feedback or criticism
(19:22):
from somebody like, I don'tknow, I forget what the Quote was.
But, you know, it was justperfect because it's like, you know,
online, somebody, you know,you can roast me, but, like, I don't
care.
Like, I don't know you.
Like.
So, yeah, I like the.
When you start saying thequote, it made me think of a slight
variation, which is like, I'mnot going to take, you know, feedback
(19:45):
or advice from someone whoselife I don't want to live.
Like, if you have thishorrible life and, yeah, maybe a
lot of money, but you're ill,you're angry, you give everybody
the leftover crumbs of your personality.
Like, no, thank you.
We could probably have, like,five episodes on this next question,
(20:07):
but we'll try and just boil itdown of, you know, what's a mistake
you often see the newinvestors make that you try to help
them avoid.
And you've already mentionedprobably 10 on this episode.
But, you know, I can eitherreiterate one or another one that,
you know, you've worked on or seen.
Yeah.
I think often it's takingwhat's provided and underwriting
(20:30):
that.
So someone can provide you anExcel spreadsheet, but maybe verify
the data behind it and get some.
Some proof.
So, for example, I've seenthis investor, this fix and flipper,
has completed 20 flips in thelast 18 months and has these great
(20:52):
ARVs.
Okay, beautiful.
It's all an Excel spreadsheet.
That's wonderful.
But did you look at the saleprice of the properties?
Did you confirm?
Are they just putting anotherprivate lender in place and then,
you know, calling a new ARVwithout an appraisal?
Or was it so just kind ofunderstanding the numbers beyond
(21:14):
what is provided or furnishedthrough the borrower a little deeper?
I think that's one of thebiggest things that I see when people
come to me and they're like, Iunderwrote everything.
I just want you to get it,give me a sanity check.
I'm like, well, we don't haveanything verifiable here.
Yeah, we recently saw onewhere somebody bought a property
for 150,000, said they put 50into it, now it's worth 500,000.
(21:37):
And we're like that.
It doesn't really seem likeit's adding up.
So, yeah, the red flags are easy.
It's the yellow flags that are hard.
No, that is 100%.
Wow.
It's a red flag.
Oh, I love that quote, man.
I'm stealing that so you canhave it.
Yeah, flags easy, yellow flags hard.
(21:59):
Oh, you want to cite peopleand send them to Capital Verified
Dot com, that'd be great.
There we go.
So, so let's do a little bitof lightning round, get your opinions
on things.
Taking the existing currentmarket, real estate market, if you
could take one word todescribe it, what would it be?
(22:20):
Volatile.
I would agree with that.
I was actually getting peopletrolling me on in bigger pockets
the other day because Imentioned it was volatile and there's
a report like 49 out of 50markets are now declining and somebody
said, you know, made acomment, I'm like, yeah, if you wait
a year I'll be able to buy itlike at you know, 20% discount.
(22:43):
And you know, someone's likeprovide me links, provide me this.
So I actually threw them twolinks because you know, I again,
I invest in a non performingnote space so I can see people who
are in default and they'rejust literally knife falling, dropping
prices.
Where I've seen one Propertystart at 900 now it's in the sixes
because they're just trying toliquidate and you know, their loans
(23:07):
matured and they're at 18%interest right now.
So they're trying to sell.
Yeah.
What's one thing you'vechanged your mind about in the last
year?
I lost it.
Let's see, what did I changemy mind about in the last year?
Oh, shoot.
Sorry.
I know this is lightning.
(23:27):
Sorry.
Let's give it.
Okay, we'll skip it.
We can maybe come back.
It's like a family feud, youknow, this clock still timing.
What's one person you wouldthank for your success?
Oh, I have this.
Yeah.
So Pat, or Pat Hunt, he was mycommander in like I don't know, 2007
(23:48):
through 2009.
I was his executive assistant.
And this man just taught me somuch about love, charisma, investing.
He was a big craps player andI lived in Vegas at the time, so
we.
That's how I learned how toplay craps.
So yeah, I think about him allthe time.
When I think about like thebest mentors and we don't even talk
like maybe once a year birthdays.
(24:09):
But still, still lots oflessons carry forward.
Okay, so if I understand thiscorrectly, you are a due diligence
risk mitigation expert whoplays craps.
And eight push and take.
Yeah, that's how much craps I know.
So my grandfather when I waslittle used to te me crops and baccarat
(24:31):
and I can't remember now, but yeah.
So it also works out well whenyou're at the table.
And the $60 that I planned on,you know, do using all night goes
and I want to leave but peopledon't like you to leave the table.
So then you get to play withother people's money.
Yeah, exactly.
So we can go back to see ifyou've thought of anything that you
(24:55):
changed your mind on last year.
If not, that's okay as well.
We can wrap this up and youknow, any thoughts or what?
How could people reach out toyou and learn more about your services?
Yeah.
So capitalverified.com is mysite and where you can initiate any
services.
And then I've got an Instagramat Mel Palmer me where I try to make,
(25:20):
I try to make due diligencefun and funny because it's really
boring.
Yeah.
And just final thoughts.
I'm really looking forward tothe conference and just, you know,
a long enduring just body thathas provided so much value over the
years and yet continues totransform a bit.
(25:42):
So my first time attending.
Really looking forward to it.
Great, thanks.
And look forward to seeing allof you September 18th to 20th in
Chandler, Arizona at the paperTrail Conference.
Melissa, thanks for joining us today.
And for those listening, makesure to leave a like review to this
podcast.
Thank you all.
Thanks Chris.
On this episode of the PaperTrail podcast, we speak to Melissa
Palmer of Capital Verified.
This is an interesting andgreat episode because she provides
due diligence services forprivate lenders and other note investors,
which I didn't even know this existed.
And when we heard about thisservice, we wanted to make sure she
(01:08):
would be speaking at the papertrail conference September 18th to
20th in Chandler, Arizona.
So hope you enjoy this episodewith Melissa, who is a former investigator
as well.
So thank you and enjoy.
(01:29):
Hey Melissa, how are you today?
Hey, doing well.
How are you, Chris?
Good.
We were just talking offrecording about a little busy for
a Friday today before holiday weekend.
But all is good.
So why don't we just kind ofroll right to it and have you start
with telling people a littlebit about your story, what you do
(01:53):
and how you got into yourbusiness because it's really creative.
Thanks.
Yeah, so I'm originally from Wisconsin.
I joined the air force in 2007and I quickly started using my VA
loans to get into investingjust as a, a buyer, you know, primary
(02:14):
property buyer originally.
And I like to say that I'vegone from like the HGTV mindset,
maybe grown to a little bit ofbigger pockets mindset even though
I never knew it was a blog andyou know, got into the kind of creative
finance realm and thenrealized, you know, there's, there's
so many ways to make money andthere's a lot of ways to lose money.
(02:37):
So I kind of leveraged mybackground while I was in the Air
Force.
I was a federal agentconducting criminal investigations.
And so with all the ways tolose money, I saw an avenue to help
people avoid fraud.
You can't prevent it, but help avoid.
(02:57):
So kind of repurpose thoseinvestigator skills as a due diligence
consultant of sorts.
So yeah, I saw you know yourwebsite and stuff provides due diligence
services for the privatelending, but I'm guessing like I
invest in non performing loansand other things.
Pretty much you could providea service to anybody would be my
guess.
It's more you're really justdoing that due diligence, which is
(03:21):
I think the most importantthing in any type of investing space.
For sure.
Yeah.
It's kind of like applying theappropriate tool for the job.
You're not necessarily goingto use a hammer drill on a two by
four, but um, the at the endof the day due diligence can be done
so many different ways andthat's kind of why I niched down
(03:43):
into the private lender space.
Okay, now you mentioned alsothat you've owned some rentals and
so forth as you startedgetting investing, just curious where
your portfolio and have youcontinued to grow that as well or,
you know, how's that looking today?
Yeah, so it's primarily in BigBear, California.
I've got a triplex, a shortterm rental, um, and a dirt lot that
(04:07):
I'm developing, a commercialdirt lot.
So I've got a couple otherrentals in west Memphis, Arkansas
and those were non performingpartners which I took over the properties.
So I don't want those.
But they were a consolidationprize for the capital that I wanted
back.
Right, okay.
(04:27):
So you're developing.
That is awesome to go fromwhere you are to, you know, development.
I come from a background ofdevelopment and construction and
everything.
So every time I hear that.
And actually today I sent ourteam pictures because we have two
properties that we took backon non performing loans that we're
renovating them.
(04:48):
And I sent some pictures ofthe renovations and in the blurb
I'm like, I know I'm the onlyone who enjoys seeing like framing
going inside a house or likesiding being completed, but this
is my joy and excitement.
So great.
What's, you know, somethingabout your journey that most people
(05:08):
don't know but probably should.
Yeah.
So people think I got into thedue diligence because of my special
agent background, but reallyit's because I got ripped off.
So I got invested into a totalPonzi scheme, Robin Peter to pay
Paul based off ofrecommendations and a very expensive
(05:29):
paid community.
And at the end of the day Irealized if I could fall for this
stuff as a, as a formerfederal agent, others could tune,
especially new investors.
And so yeah, that's, that'sthe, you know, full.
I won't say it's the realstory because they're both part of
the story, but it's the fullpart of the why I got into this.
(05:53):
I'm guessing you probably didyou beat yourself up a lot saying,
I can't believe I fell forthis because this is my background.
I should have and likerecircle yourself a thousand times
through the steps of like, youknow, everything.
Unfortunately.
Oh yeah.
Reliving every moment where Iwas like, I asked for that information,
so good job me, I asked for it.
(06:14):
But they didn't, but theydidn't provide it.
Right.
So it's the person, theproperty, the proof.
Right.
They can give you furnish allof this information, but if you're
not verifying it, there'sreally not a whole lot of security
there.
Right.
And so I like to say don'ttrust, verify.
A lot of people will like tolean in with trust, but I think when
financials, you know, whenthere's financial outcomes, you really
(06:38):
want to verify those figures.
And if at the end of the dayit's a lot of dreams and not reality,
I'm not saying you can'tinvest in those.
I mean, in developmentespecially, I mean, I'm developing
in a very rural area of BigBear, California.
So it's like, you know,there's, there's a little bit of
dream and, and chance that cango into some investments, but just
(06:58):
knowing, you know, actuallyhaving the information to make an
informed decision is reallythe most important part.
Yeah.
Because there's a very bigdifference between a deal going bad
and having risk and a dealwhere it's just fraud.
And you know, and sometimesthose deals end up going bad that
turn into fraud where peopledidn't have that upfront.
But then there's deals that.
(07:20):
Interestingly enough, I didnot know this.
I'm curious if you did.
So we are, you know, have,There's a software that was sharing
with us that they have asystem that does like OCR and scanning
and they mentioned that theycan easily tell if a bank statement
has been modified becausebanks actually have their own font
(07:40):
and font size that is onlytheir own specific.
So like if you took like a PDFeditor and like tried to change a
number and so forth, the fontand font size by each bank is specific
only to that bank.
So these OCR systems caneasily pick that up and note it,
flag it.
And we were getting ademonstration on this because again,
some of the fraud is when yougo to lend to people, they say they
(08:02):
have this much in the bankaccount and there's plaid and stuff
that can adjust, but a sixmonth old bank statement, you might
not be able to, you know, seeor know.
And they were, you know, andthey were telling me about this,
I'm like, wow, it makes somuch sense.
But I'm like, I never knew that.
Yeah.
And like plaid is a wonderful,a wonderful way to actually integrate,
(08:23):
not even have to look at documents.
Right.
But at some point when you'rejust doing the preliminary scan,
you're not trying to make it acomplete chore for a borrower too.
And so it's easy to kind ofget by with the lowest threshold
documentation available andthen kind of just proceed down that
route.
Yeah.
And like you mentioned, a lotof times most people like to think
(08:47):
people are trying to do good.
So you put A trust in themwhere, like you said, don't trust,
but verify.
I've never heard that.
And I actually like that.
You know, it's usually thetrust would verify.
Right.
So, you know, everybodytypically has a core investment philosophy.
If you could describe yours inlike, one or two sentences.
(09:07):
What's your philosophy andwhere did it come from?
Huh?
Well, I would say it's thedon't trust verify that's kind of
like.
That is.
I mean, that's a greatphilosophy, honestly.
I mean, I.
I would roll with that.
That's actually a great one.
So.
And I think, you know, just to.
So I'm not copping out with myprevious, you know, offering is,
(09:32):
you know, I think.
I think investing with valuesis really, really critical.
And I'll say I'm, you know, Istarted investing in 2009, but it's
very.
Been very slow and I had.
I'd, you know, don't have somemassive portfolio.
But I will say I did findmyself chasing investments such as
(09:53):
the Ponzi scheme that I foundmyself in that really didn't align
with my values or interestsbeyond returns.
And so, you know, part of thatdon't trust verify is like, not investing
in the returns, investing inthe information, and actually making
that sure that informationaligns with your goals and values.
(10:14):
I think so.
So many people will just lookand chase a number and not understand
what's behind that number.
And we run a fund and, youknow, we target 8 to 10% of people,
and some people just laugh atus and like, oh, I see deals at 25,
and I'm like, that's great.
But how did you really.
Are people really getting 25%?
(10:34):
So.
Right.
Yeah.
What's the percentage ofdefault rate on those 25% opportunities
you have?
Yeah, well.
And kind of you might beanswering the questions ahead each
one.
But, you know, what's oneprinciple you live by in, you know,
your business that guides howyou treat just the people around
(10:54):
you?
Yeah.
So for principles, I like toborrow the stoic philosophy, like
the stoic virtues of courage,wisdom, justice and temperance.
I feel like those are justlike a very solid foundation for
me then building upon withthose values and then the ending
(11:14):
goals.
So, yeah, no, great.
You know, we have you as aspeaker at the paper trail conference,
I guess.
You know, why is it importantfor you to, you know, be a part of
a conference and speak andprovide, you know, a session for
people?
Yeah.
I think especially with shifts.
Right.
If people are shifting frompaper notes to maybe more private
(11:38):
lending, I think in thoseshifts is where we can find ourselves
in just suspended in this verybrief period of vulnerability where
we're trying to apply skillsin one area to another area and they
don't always translate.
And so I think it's veryvaluable to have these upfront conversations,
(11:59):
talk about the risks that andrewards, talk about the disclosures
and you know, industry practices.
And so yeah, that's, that'skind of where, where I feel excited
about that.
No, and I like to kind of usethe analogy.
Sometimes it's like being a.
Again, if I'm not saying it'sthe same in any way, but it's kind
(12:22):
of like being like a doctor oran attorney.
Like there's different typesand just because you're an attorney
doesn't mean, you know, youcan do real estate if you're doing
corporate law.
And it's same thing in noteswhere yes, I could do seller financing
or I could do non performing.
But then when you shift overto private lending or try and mix
those, like you said, there'sthat moment of vulnerability where
(12:43):
you don't know what you don'tknow and you think you know sometimes
because you've already been inthe space, but you know, it's really
that area where you know, anda lot of times it's a, you know,
sometimes can be a very briefmoment in time, but it's still a
moment where you don't want,you know, all the cards come falling
down on you.
So yeah, I even think aboutlike the contractor that moves to
(13:06):
an investing fix and flipper.
So now instead of being thecontractor being paid, now you're
the one putting the risk up.
And they make differentmistakes than they'd make as an employee.
So even with that very closerelation, sometimes there's just
lessons to be learned in thatlittle gap.
No, I have a very hard lesson learned.
(13:27):
So I made the move from, I wasdoing construction management for
commercial large generalcontractor and then you know, we
used to call it go to darkside because I went to go work for
real estate developer and Iremember was managing a project and
one of the vice presidentscame to me and this was, you know,
15 years ago and you know, youknow, I'll say construction and development
(13:52):
being treated back then isvery different than today in regards
to some of the things and Igot completely reamed and the whole
sit down when I was with thisperson is you're thinking like a
contract.
They're not like a developer.
And it is two completelydifferent mindsets and shifts.
But I'll tell you just like,you know, you mentioned you've been,
(14:15):
you know, burned on a dealthat just kind of been like engraved
in me ever since on the differences.
Because as a contractor,you're just like, I'm getting paid,
I just want to get the job done.
Here's my scope of work.
And just I want to get done.
And the developer, your, hey,look what we got to mitigate risk.
You know, we want, you know,there's so many different avenues
and paths and things you haveto manage versus a contractor.
(14:37):
And that was really eyeopening for me.
So that is.
Sorry, I digress a little bit,but that's a great analogy without
spoiling the whole session.
You know, what's one thing youhope people can learn or think differently
after hearing from you?
Ooh.
Well, I think you're, youactually brought up some beautiful
(15:00):
points here where I think it'sjust understanding the different
lenses to apply.
Right?
So underwriting as a buy andhold investors different than underwriting
as a note investor or as aprivate lender on a fix and flip
versus a private lender on ashort term rental or getting some
of those more creative exit strategies.
(15:21):
So I think it's just allowingpeople to understand there's no rules.
There's art and it's not, it'snot rules in science, it's art and
craft and lenses to applybased on those risk tolerances and
outcomes desired.
And so just having a, maybe alittle more in depth conversation
(15:44):
because I know a lot of peoplewant a checklist and they want the
rules and, and maybe just kindof opening them up to the opportunity
to create their own left andright boundaries based on the lens
that they want to view aninvestment from.
I'm laughing because I had twopeople reach out to me and be like,
can you send me this checklist?
Can you send me this checklist?
(16:05):
And you know, I try and preach together.
It's a guide, you know, andjust because you check a box on something
is getting something is verydifferent than being able to analyze,
review it and know what nextquestions to ask.
And that's where, you know,it's hard because you need experience.
(16:26):
But it's also good to be atconferences and meet people like
you who can share theirstories and you know, can do this
kind of in your sleep andexplain some of these things.
So people, even if people justpick up one lesson from it, it's
again, it's movement towards growth.
So.
And you've probably workedwith, you know, all kinds of investors
(16:51):
in your mind when you look atsomebody and it's like, wow, that
person really knows whatthey're doing.
I, you know, look up to them,you know, what in your, you know,
what is there, you know, makesyou feel like they are like exceeding
or being, you know, in theinvestment world or space.
I think when, you know, andI'm, I'm going to preface this with
(17:11):
I'm an auntie, I'm, I'm not amom, but I, I do think I've got yard
kids.
So we've got a front lot,house, back house and in a shared
yard with my brother in lawand sister in law.
But when I look at investorsthat I really truly admire, they
still have a really close andloving relationship with their family.
(17:33):
Their kids still want to spendtime with them and vice versa and
not, not because of a neglectinvolved with that time that they
don't get, but just a true,meaningful connection with their
family.
Because it's, it's, I think alittle easier to be obsessed and
just build, build, build,grow, grow, grow.
It's probably a little harderto actually maintain a semblance
(17:58):
of reality along with that growth.
So it's, it's kind of a downto earth rich neighbor that you didn't
expect to have all that bankand property.
Yeah.
And it's all about balance,you know, and providing that, you
know, work life balance, whichI know a lot of people, you know,
always say there's no suchthing but you can have it.
(18:18):
And it's interesting youmentioned that because I know an
individual who, you know, hasgrown a company to, you know, start,
you know, in the billions.
And that person though gets upat 3:30 in the morning, goes to work
and is at work at like 5am andis always the last person to leave
the office.
And they've been doing thatfor 30 years.
(18:39):
And you know, question is, didthey ever see their daughters grow
up, go to their sports, go totheir games or did they just spend
it trying to build somethingwhere it's great that you can say
I built this humongousbusiness and people might respect
and admire you.
But for me personally, I am aparent of two kids and at the end
(19:01):
of the day I really don't carewhat other people think about me.
It's what my family does.
And somebody made a quoterecently and I forget who it was,
but they were in the newsgetting blasted for something and
their comment was like, I'llnever, I don't take feedback or criticism
(19:22):
from somebody like, I don'tknow, I forget what the Quote was.
But, you know, it was justperfect because it's like, you know,
online, somebody, you know,you can roast me, but, like, I don't
care.
Like, I don't know you.
Like.
So, yeah, I like the.
When you start saying thequote, it made me think of a slight
variation, which is like, I'mnot going to take, you know, feedback
(19:45):
or advice from someone whoselife I don't want to live.
Like, if you have thishorrible life and, yeah, maybe a
lot of money, but you're ill,you're angry, you give everybody
the leftover crumbs of your personality.
Like, no, thank you.
We could probably have, like,five episodes on this next question,
(20:07):
but we'll try and just boil itdown of, you know, what's a mistake
you often see the newinvestors make that you try to help
them avoid.
And you've already mentionedprobably 10 on this episode.
But, you know, I can eitherreiterate one or another one that,
you know, you've worked on or seen.
Yeah.
I think often it's takingwhat's provided and underwriting
(20:30):
that.
So someone can provide you anExcel spreadsheet, but maybe verify
the data behind it and get some.
Some proof.
So, for example, I've seenthis investor, this fix and flipper,
has completed 20 flips in thelast 18 months and has these great
(20:52):
ARVs.
Okay, beautiful.
It's all an Excel spreadsheet.
That's wonderful.
But did you look at the saleprice of the properties?
Did you confirm?
Are they just putting anotherprivate lender in place and then,
you know, calling a new ARVwithout an appraisal?
Or was it so just kind ofunderstanding the numbers beyond
(21:14):
what is provided or furnishedthrough the borrower a little deeper?
I think that's one of thebiggest things that I see when people
come to me and they're like, Iunderwrote everything.
I just want you to get it,give me a sanity check.
I'm like, well, we don't haveanything verifiable here.
Yeah, we recently saw onewhere somebody bought a property
for 150,000, said they put 50into it, now it's worth 500,000.
(21:37):
And we're like that.
It doesn't really seem likeit's adding up.
So, yeah, the red flags are easy.
It's the yellow flags that are hard.
No, that is 100%.
Wow.
It's a red flag.
Oh, I love that quote, man.
I'm stealing that so you canhave it.
Yeah, flags easy, yellow flags hard.
(21:59):
Oh, you want to cite peopleand send them to Capital Verified
Dot com, that'd be great.
There we go.
So, so let's do a little bitof lightning round, get your opinions
on things.
Taking the existing currentmarket, real estate market, if you
could take one word todescribe it, what would it be?
(22:20):
Volatile.
I would agree with that.
I was actually getting peopletrolling me on in bigger pockets
the other day because Imentioned it was volatile and there's
a report like 49 out of 50markets are now declining and somebody
said, you know, made acomment, I'm like, yeah, if you wait
a year I'll be able to buy itlike at you know, 20% discount.
(22:43):
And you know, someone's likeprovide me links, provide me this.
So I actually threw them twolinks because you know, I again,
I invest in a non performingnote space so I can see people who
are in default and they'rejust literally knife falling, dropping
prices.
Where I've seen one Propertystart at 900 now it's in the sixes
because they're just trying toliquidate and you know, their loans
(23:07):
matured and they're at 18%interest right now.
So they're trying to sell.
Yeah.
What's one thing you'vechanged your mind about in the last
year?
I lost it.
Let's see, what did I changemy mind about in the last year?
Oh, shoot.
Sorry.
I know this is lightning.
(23:27):
Sorry.
Let's give it.
Okay, we'll skip it.
We can maybe come back.
It's like a family feud, youknow, this clock still timing.
What's one person you wouldthank for your success?
Oh, I have this.
Yeah.
So Pat, or Pat Hunt, he was mycommander in like I don't know, 2007
(23:48):
through 2009.
I was his executive assistant.
And this man just taught me somuch about love, charisma, investing.
He was a big craps player andI lived in Vegas at the time, so
we.
That's how I learned how toplay craps.
So yeah, I think about him allthe time.
When I think about like thebest mentors and we don't even talk
like maybe once a year birthdays.
(24:09):
But still, still lots oflessons carry forward.
Okay, so if I understand thiscorrectly, you are a due diligence
risk mitigation expert whoplays craps.
And eight push and take.
Yeah, that's how much craps I know.
So my grandfather when I waslittle used to te me crops and baccarat
(24:31):
and I can't remember now, but yeah.
So it also works out well whenyou're at the table.
And the $60 that I planned on,you know, do using all night goes
and I want to leave but peopledon't like you to leave the table.
So then you get to play withother people's money.
Yeah, exactly.
So we can go back to see ifyou've thought of anything that you
(24:55):
changed your mind on last year.
If not, that's okay as well.
We can wrap this up and youknow, any thoughts or what?
How could people reach out toyou and learn more about your services?
Yeah.
So capitalverified.com is mysite and where you can initiate any
services.
And then I've got an Instagramat Mel Palmer me where I try to make,
(25:20):
I try to make due diligencefun and funny because it's really
boring.
Yeah.
And just final thoughts.
I'm really looking forward tothe conference and just, you know,
a long enduring just body thathas provided so much value over the
years and yet continues totransform a bit.
(25:42):
So my first time attending.
Really looking forward to it.
Great, thanks.
And look forward to seeing allof you September 18th to 20th in
Chandler, Arizona at the paperTrail Conference.
Melissa, thanks for joining us today.
And for those listening, makesure to leave a like review to this
podcast.
Thank you all.
Thanks Chris.
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