The Note Investing Strategy Banks Hope You Never Learn

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🎙️ How Scott Carson Bought $1 Billion in Distressed Debt — And Helped Homeowners Along the Way

Ever wondered how to become the bank and earn double-digit returns—without swinging a hammer or flipping houses?

In this episode of The Wisconsin Investor, we sit down with Scott Carson, founder of WeCloseNotes.com, who shares how he's purchased over $1 billion in distressed debt and created win-win outcomes for struggling homeowners.

🔑 What You’ll Learn:
• What note investing is and how it works (buying mortgage debt directly from banks at 40–60¢ on the dollar)
• Why you don’t need to fix the property—just “rehab the borrower”
• How Scott earned nearly 90% returns on a $12,000 note while helping a family avoid foreclosure
• The top strategies for working with borrowers, foreclosing when necessary, or reselling notes for profit
• The “sweet spot” for non-performing notes ($100K–$250K)
• How to source notes directly from special asset departments, LinkedIn, and whole loan traders
• How to fund deals through self-directed IRA investors (and how to find them)
• Why note investing might be the most overlooked path to passive income and real impact

💡 Scott’s approach proves you can create serious cash flow and do good in the process.

🔥 Free Training & Resources:
📘 NoteWeekend.com — Grab Scott’s free 3.5-hour course on note investing
📞 TalkWithScottCarson.com — Book a call with Scott directly

Or check out Scott's Website by visiting: https://weclosenotes.com/

Whether you're a seasoned real estate investor or brand new and looking for your first passive deal, this episode will open your eyes to a powerful strategy most people never hear about.

Episode Transcript

Speaker 1 (00:00):
What is up, people?
I am back with another episodehere, and I am bringing you guys
as usual.
I think I do this all the timebut I'm bringing you guys a
great guest today.
At the time we're recordingthis, I had the opportunity to
be on his podcast just a fewdays ago, so when this drops
it'll be a little bit older,because we got some other ones

(00:20):
in the bank right now.
But go back and I'm going tointroduce our guests here in a
second.
Before I do that, though, I'mgoing to get into today's
sponsor, as I do on everyepisode, and that is Wisconsin
Discount Properties.
We are bringing you guys dealsto your inbox every single week,
6 am, it hits your inbox.
So if you're looking foroff-market real estate and
you're not on our buyers list,what the heck are you doing?

(00:41):
So get on the list, go to thewebsite, put your information in
.
What we're also doing right nowis we are giving away our BRRRR
for beginners course.
So this is a huge opportunity,guys, if you're out there and
you're looking to get startedand you want to do the BRRRR
process and you're not surewhere to start.
This is an action-orientedcourse, so it's not just
education.
You're not going to come inhere and learn the fundamentals

(01:01):
of it.
You're going to actually be inand forced to take action to get
your first deal in the first 45to 90 days of taking the course
.
So, to get the course for free,join the buyers list and
somebody from our team will geton a call with you and after
that call we'll get you thediscount code to get there.
All right, let's get intotoday's episode, because I got a
gentleman here who's got tonsof experience and is going to
bring you guys something wehaven't had on the episode yet,

(01:23):
and is going to bring you guyssomething we haven't had on the
episode yet, which I'm prettyexcited about.
So I have Mr Scott Carson withme, who is the owner and manager
of WeCloseNotescom.
So he's based out of Austin,texas.
So we've got nothing againstTexas here.
We love Texas.
It's a great place.
So not a Wisconsinite, but thisguy does business all over the
country, guys.
He's got the Notes Closer Show,which has millions of listeners

(01:44):
across 130 countries.
So this guy knows his stuff.
He's got tons of people thatfollow him.
He does an online summit and aconference called Note Camp that
you guys can get access to aswell.
There's a ton of other things,so we're going to dive into the
note world a little bit todayraising private money, short
sales, non-performing notes, allkinds of fun stuff.

(02:06):
But with that let me bring inMr Scott Carson.
Scott, how you doing buddy.

Speaker 2 (02:11):
I'm doing great today , Corey, Excited to be here.
We were talking about Tampalast time last week, so I had to
wear a Tampa shirt here for you.

Speaker 1 (02:19):
Pink flamingos all over the place here for you, man
, my man bringing it.
I love it, buddy, I love it.
Well, I'm excited to have youon, man.
We had a great time recordingon your podcast, and so I'm
super excited to bring you toour audience and get to flip the
script a little bit with youtoday and be the one asking the
questions today.
So tell the audience a littlebit, man.

(02:39):
You've been in the game for along time.
Can you remember back to whenyou started and what it was that
had you even getting into thiscrazy world we call real estate
investing?

Speaker 2 (02:48):
Yeah, I can.
I mean, it's like many folksreading Rich Dad, poor Dad and
decide you want to do somethingdifferent and then going to
network at the local real estateclubs and I actually bought a
couple investment properties onmy own without any training or
education and fell flat on myface.
That's a little bit of like Ithought I knew everything
because I grew up in a hardwarestore down in South Texas with

(03:10):
my dad.
So I thought I could be likeTim the tool man, taylor, and
fix everything.
You know what I mean.

Speaker 1 (03:15):
The young audience has no idea who Tim the tool man
Taylor is by the way.
Exactly yeah.

Speaker 2 (03:20):
It's been for tools, baby, you know what?

Speaker 1 (03:21):
I mean that's right, oh man.

Speaker 2 (03:23):
But no, I mean, I fell flat in my face like some
folks do.
The only person that made anymoney was a realtor and stuff
like that.
So I looked my wounds for acouple of years and was

(03:49):
fortunate enough to get ourassets out of a sling, as I,
with a couple, I guess, say,educators and investors here
locally who were traveling thecountry speaking on real estate,
and I said that's what I wantto do.
So I left banking and threw mylot in with them and for four
years I had an apprenticeshipwith them, not only on the
mortgage side because we weredoing originations for investors
and stuff like that, but reallylearning the creative side of
real estate, investing allacross the country from the
likes of, like Ron Legrand andsome of the other folks.
So I remember that.

(04:12):
And then sending out like myfirst batch of letters to the
postcard you know, letters topostcard I mean letters to
foreclosure listings, peoplefacing foreclosure and the first
phone call I got was this ladywho hadn't paid in like a year,
she hadn't had water on in likesix months to her house.

Speaker 1 (04:28):
She had a huge cavey home.

Speaker 2 (04:30):
She was letting her four dogs run wild throughout
the house and defecating anddoing all that stuff.
So when you walk into the house, on the carpet it goes squish,
squish.
You know what?
I mean, oh, yeah, it was so badthat the lower like 18 inches
of the sheetrock was all yellowfrom the dogs.
They, the lower 18 inches ofthe sheetrock was all yellow
from the dogs.
They were just licking her onthe face.
There's food, just a realpositive environment.

Speaker 1 (04:51):
Wow that's your first one.
This is your first experienceof direct-to-seller.

Speaker 2 (04:56):
Exactly Walking in.
She was still using the toilet,so each toilet was full of
excrement, and then she wasdoing it in a five-gallon Homer
bucket.
Oh my gosh, dude.
What's running through my headis hearing Ron Legrand saying
the smell of shit and piss isthe smell of money, and so I'm

(05:17):
like, okay, this is how it goesWell that was my first, you know
I go home showered off andanyway we didn't end up buying
that one.
But that was my firstindoctrination into real estate
investing the right way, oh mygoodness, man.

Speaker 1 (05:30):
So how long have you been in this game?
When did you get started?
When was that first experience?

Speaker 2 (05:34):
Yeah, so basically, technically, I bought my first
investment property back in 2001.
And we found that they weretrying to be landlords.
But that was in 2006 was when Ibought my first.
Once I bought it, we took overa property subject to, and then
we optioned another one and itgot rocking along.

(05:55):
I sink my teeth into thedistressed note side and bought
my first non-performing noteback in 2007 on this condo in
Arizona and I bought.
That's what I love.
I love buying the distresseddebt side of things without
having to deal with toiletstands and trash outs.
You know what I mean.

Speaker 1 (06:10):
Yeah for sure.
Tell everybody out here.
So what I want to do today,scott, for my sake too and for
our audience sake somebody who'sthis is their first time being
introduced, maybe, to some ofthe terminology you're using,
that kind of stuff let's makethis in CRAN, third grade level.
Can you explain how do you buya non-performing note?
What is a non-performing note?

(06:31):
I mean, I kind of know whatthat is, but just explain it in
third grade terms.
And how do you get access tosome of these things?

Speaker 2 (06:37):
Yeah, yeah, exactly, great, great stuff there.
So a non-performing mortgage,non-performing note is exactly
like it sounds Somebody who'snot paying on their mortgage
debt.
You know like if you guystarget like foreclosure lists,
well that's listed in the fulllist of non-performing notes
where people haven't paid in sixmonths to six years or longer.
And so we buy that debt not tobuy the property, because I

(06:59):
don't really own the property.
When I buy the mortgage debt, Iliterally am replacing the bank
.
I'm buying that mortgage debtnot buy the mortgage debt.
I literally am replacing thebank.
I'm buying that mortgage debtnot from the homeowner.
I'm buying the actual physicalmortgage from their bank or
lender at usually a substantialdiscount.
The borrower still owes whatthey owe.
It's just swapping out one bankfor another.
Technically I'm the bank and Ihave all the same rights that

(07:19):
the bank does to reach out tosay hey, corey, you haven't paid
your mortgage in six months.
What happened?
What's your?
You know?
What's your country Westernsong?
You know?
Did grandma get run over by areindeer?
Did the Packers lose?
Did you spend it all on BudLight?
You know?
After the loss, you know, didyou?
Did you your job at the chiefcurd factory lay?

Speaker 1 (07:37):
you off for a period of time.

Speaker 2 (07:39):
You know what's the situation.
So we buy that debt at discount.
So if they haven't paid in sixmonths and they owe 200 on a
$175,000 house, we wouldprobably come in and buy about
50 cents on the dollar value ofthe house.
We might pay $85,000 for that$125,000 asset, where they owe
more and they're underwater.

(07:59):
And so we approach homeownersand say, listen, hey, we know
you haven't paid in a while.
Before we foreclose on you,which we have the right to do,
do you want to stay or do youwant to go?
If you want to stay, let's workout a payment plan, because we
actually, since we bought thedebt cheaper, we can be much
more flexible With the borrowersay, hey, you've been paid in a

(08:20):
year.
Well, can you bring threemonths to the table?
Can you pay your existingpayment plus $200 a month to get
you caught back up on?
You know what I mean.
Or, hey, you don't want to stay?
Okay, let's sell the property,let's do a short sale and we can
accept a little bit of a lossoff of what's owed, but we still
bought it at a price that wasmuch cheaper than we paid for.
So that's kind of what we do isliterally, we get these lists

(08:43):
in from banks, from mortgagecompanies all across the country
and it's going to be like 200to 500 different notes on
properties all across the UnitedStates, including Wisconsin.
You know what I mean.
We see some stuff in.

Speaker 1 (08:58):
Wisconsin Okay.

Speaker 2 (09:01):
And we can cherry pick this stuff.
Some people think you need tohave millions and millions and
millions of dollars, and whilethat does help, no, you don't
have to have millions of dollars.
A lot of banks excluding, likethe big ones like Bank of
America, chase, citi, wellsFargo.
You're not going to buy aone-off mortgage from them, but
there are plenty of otherlenders that will sell this
stuff to you and the goal isn'tI know a lot of people come from
hey, I want to own the realestate side of things, right?

(09:22):
I want to own the property.
I want to go out and touch itand rub it and replace the paint
carpet.
Well, I don't want to do that.
I want to get paid, like a bankdoes, right, you know.
And so let's put some numbers,like we just talked about.
So let's just say it's simplethey owe $200.
It's worth $200.
They haven't months to a year.
Why the bank hasn't foreclosedalready.

(09:43):
I don't know.
I mean, it may be a lowervalued asset in their portfolio.
They may have tried to work itout.
It might be in a state that'slonger to foreclose on.

Speaker 1 (09:52):
There's a whole variety of reasons why they
didn't sell it to us.

Speaker 2 (09:54):
So we come in, we see this, we like the value.
We evaluate all the loandocuments, the servicing notes
between the borrower and thebank, see that this borrower may
be a good fit.
And so if we buy it at 100 andlet's say their mortgage rate is
at 6%, well, if they just startpaying on time again.
So we bought that 6% mortgageat 50 cents a dollar If they

(10:17):
just start paying on time, it'sa 12% cash and cash return.
If they bring three or fourmonths to the table, that goes
to a mid-teens maybe 20% firstyear.
Wow, we get the bar back ontrack making payments for 12
months.
It's now considered are-performing note.
I could turn around and sell itback to Wall Street or back to
other mortgage companies who arelooking for performing paper at
, say, 80, 90 cents of thedollar.

(10:38):
So I've now gotten in a year.
I got some skin in the gangthree to four grand 12 months of
on-time payments.
If I bought it for $100, I'mnow turning around selling it at
$0.80.
So that's at $160 to $170,making $60,000 on the note sale

(11:01):
and so that's a pretty goodreturn on a $100,000 investment.
Oh my goodness.
The nice thing that I likeabout note investing is you
don't have to do it full time.
The great thing is that thereare heavy lifters Fixing
flippers.
You've really got to be spot onfor a lot of times, meeting the
contractors and knowing yourpeople and knowing comps in time
.
If I can rehab the borroweroutreach, I'm not knocking on

(11:33):
doors trying to evict peoplemyself.
If they won't play ball, thenwe kick it to our real estate
attorney in that state to do theforeclosure and then they
foreclose then if we could sellit at auction.
Sometimes we do that.
If we don't sell it at auction,we take it back.
Then we just bump it to ourlocal realtor to handle the
eviction, to clean out and thenthe rehab side of things.

Speaker 1 (11:54):
Wow.
So then you end up flipping it.

Speaker 2 (11:55):
Worst case scenario yeah, we flip it, We've held it
Once we foreclose and if itdoesn't sell at the auction,
it's our own REO.
We can do whatever we want withit.

Speaker 1 (12:05):
Owner-finance yeah you're controlling the property,
because you control the debtExactly and that's why I only
buy in first lien position.

Speaker 2 (12:14):
I mean, there's people that buy second liens and
junior liens and that's fine.
It's a much riskier spot to bein because if the first lien is
not getting paid, the first liencan foreclose and wipe them all
out completely.

Speaker 1 (12:25):
You know what I mean.
Okay, so that's the risk.
So I'm thinking about that asraising private money.
Right?
What do I say to my lenders whohave a smaller dollar amount.
They want to come in and maybethey want to fund rehab or do
whatever.
They're going to go in secondor third position potentially
For them?
Obviously it's a relationshipthing when you're doing private
money, but like what, what areyou communicating to those
people or the people out herewho are doing that as far as

(12:46):
what to explain?
You know to be full disclosingto their, to their potential
lenders?

Speaker 2 (12:52):
So you're talking about if they're funding from a
second in a second lien positionor buy a note deal.

Speaker 1 (12:57):
Say I got a.
Say I got a you know, friend,family member, whatever they
want, they got 20 grand layingaround.
They want to put it to work.
But I got a bank note on thefirst bank.
No, it's going to be in firstposition.

Speaker 2 (13:07):
So always make sure there's a couple of things.
Make sure that the first isgetting paid, that's one of the
most important things, causethat's going to wipe you out.
Make sure taxes are gettingpaid, cause that's the thing
that would wipe us all out.
Yeah, first, more than you'recomfortable with, you know,
we've all had deals that weremaybe okay, the market's chasing
.
We're at a combined loan tovalue of 70, 75, 80.

(13:29):
You know, I don't really wantto get above that, unless it's
an emergency or something.
For the most part, but try tostay at that.
You know, I guess the goldenrule when it comes into it is
stay below 70, 75% of the afterrepair value.
If you're rehabbing theproperty Right On the note side,
we're only raising capital inthe first lien position because
that's really all that we'rebuying.

(13:49):
And then we try to have theinvestor who funded the note
fund a little bit extra forforeclosure costs and servicing
and rehab if we need to.

Speaker 1 (13:57):
Okay, got it.
So that was one of my otherquestions I had for you, scott.
So, like you said, you don'thave to have millions and
millions of dollars around to dothis, right?
So are you raising privatemoney then to buy the notes and
you're keeping some kind ofspread for kind of doing all the
work, or how is that working asfar as being able to buy
several of these?
Or is somebody out therelooking to buy their first note
who doesn't have a ton of cashbut has a lot of time and grit?

(14:19):
How are they going to do thisthing?

Speaker 2 (14:21):
So here's the golden rule when you're being a real
estate investor, it's no matterif you're trying to raise
$50,000 or $5 million.
One of the greatest ways tofind investors is a networking,
but also we target a lot ofself-directed IRA investors
people who have used their IRAto either buy a rental property
or to lend money out of theirIRA and you can literally go to

(14:44):
the county records office or thecounty appraisal districts to
find these investors in justabout every state.
There's a few non-disclosurestates out there.
We go here in Texas or I go toFlorida, one of our favorite
states.
There we love.

Speaker 1 (14:56):
Florida.

Speaker 2 (14:58):
Exactly A lot of money down in Florida.
You could literally go toCollier County or Lee County and
go to the appraisal districtand just type in, say, equity
Trust, or type in Quest Trust orMid-Atlantic, and Quest is no
longer around but there's stillstuff that's still floating
around with them.
And if you type in that in theproperty owner's name, it's
going to pull up a list ofpeople who have used their IRA

(15:21):
to buy a rental property and weall know if they're using their
IRA to buy property.
It's got to be passive, right,it's got to be a hands-on.
Ideal for note investorsbecause it's passive.
Yes, we buy a note.
We get the bar re-performing at12.
We borrowed the money at 8.
Great, we're paying ourinvestor back there 8% on a
quarterly basis.
We don't pay monthly payments.

(15:41):
It's is we don't pay monthlypayments, we do once a quarter.
It speeds up a little bit.
It keeps the IRA, but you canliterally then.
The great thing about goingback to these county records is
it's got the mailing address.
You know what I mean Sometimesthese counties.
You can actually do a fewbuttons and it downloads a full
spreadsheet, borrower's addressname and then their mailing
address to do a mail rush.

Speaker 1 (15:59):
Oh my goodness.

Speaker 2 (16:01):
And the great thing about IRA investors is that we
know they're investors just likeyou and me.
Right A, they've got money thatthey need to put to work most
of the time and two I mean threethey're always looking for
deals.
Yes, and actually, if you'vetalked to most of the IRA
companies and custodians outthere, actually paper is one of

(16:22):
the biggest things these peopleare invested in.
Now, if they're lending youmoney, they're in the paper game
right.
Right, so they're lending on afirst lien.
Well, how about you fund afirst lien investment, a note
deal?
You're still going to get paidyour interest.
You're going to be eithercodenamed on the assignment of
mortgage which transfersownership, not a deed, Because
when you're buying a mortgage.
The property doesn't changehands, it's just the lender does

(16:43):
Okay, okay.
And so that's a great thing forfolks now finding people who
have lent money out of their IRA.
If you go to the clerk or therecorder's office and do a same
search for like equity trust,quest trust, it'll pull up and
do a deed search for that.
You'll pull up people who havelent money out of their IRA and
who they lent the money to andhow much they lent out as well.
Really, we will do a release oflien search and do the same

(17:08):
search.
You can see people who'vegotten paid back have money
sitting on the sidelines now.
So it's not as easy on thecounty clerk side because you've
got to look at deeds and stufflike that.
But it's a great thing to hirea VA to do and let them go off
and running for it.
But literally, I mean, even ifyou're in a nondisclosure state
like Minnesota is nondisclosure,virginia, maryland

(17:28):
nondisclosure because ofgovernment, california, arizona,
texas, florida, ohio the landfrom where Equity Trust is
located you can literally findthousands of people who have a
self-directed IRA to fund yourno deal or fund your real estate
deal.

Speaker 1 (17:43):
Right, and they don't have to be in your state, they
can be anywhere.

Speaker 2 (17:46):
It's a beautiful thing with a thing called Zoom.

Speaker 1 (17:49):
You know what I?

Speaker 2 (17:50):
mean.
So the only direct mail marketwe do in the note business is
actually sending out to IRAinvestors.
That's literally it, becauseall of our deal flow for the
most part comes direct from ouronline marketing via LinkedIn or
targeting servicing companiesor mortgage bankers that we can
find in any state.
They have to be registered forthat state as a licensed

(18:10):
mortgage banker.

Speaker 1 (18:11):
Okay, I was just going to ask you that.
So, going back to when you saidyou'll get some tapes I think
they call it in the notebusiness, is that right?
That's correct Like 200 to 500of these things on a tape and
you're going through and kind ofevaluating them all and doing
these kinds of things and again,I imagine you probably have a
system or a VA that can do allof that and then kind of
highlight some of the ones thatyou want to go for.

Speaker 2 (18:30):
Yeah, and it's all I mean.
You're getting a spreadsheet.
So I always take the OTSCsyndrome out of that.
Oh, that's so cute.
You know what I mean?
That property is so cute.
I just want to buy it.
I, no, don't do that.
Do not fall in love with aproperty.
Fall in love with the numbers,the way.
I look at it, then let this be aproperty so on this spreadsheet
yeah, on this tape we'll havethe borrower's name, how far

(18:51):
behind they are what they owe asfar as the unpaid principal
balance, potential legal balance.
An estimated value of theproperty and then what the
seller will give us.
Of course, it's usually Zillowbut we just use that on the
front end.
We'll always do deeper, dodon't?
So we can run formulas based onwhat we think, what they tell
us.
As far as pricing, some of themwill say well, we want full

(19:12):
value, which they call par.
I'm like, we don't want to payfor par, we want a discount,
right, right.
We always want a discount.
So, running some formulas basedon what we would buy that note
at and then what their monthlyP&I payment should be or what we
would modify it for, we can runsome quick formulas to
understand okay, here's a top 20, here's a top 30 out of this

(19:32):
list of 200.
And then we just submit a bidin on all 30 of them in just a
few minutes, knowing that thebanks, the lenders, are not
going to accept all 30.
If they did, we'd probably bidtoo much, which we can say okay.
But knowing that out of 30,okay, we get 10 that are
accepted.
And once those are acceptedthen we do the deeper dive.

(19:53):
Then we're going to sendsomebody out to drive by the
property and pull a broker priceopinion to give us a true value
of the property, not atestament.
We're going to check taxes.
We're going to talk to theattorney that's handling it, see
how far they are in theforeclosure process or if they
haven't started.
If the borrower's filedbankruptcy like a BK, chapter 13
, where are they on the paymentplan process?
Because we like BKs because itbasically turns into cashflow.

(20:14):
If the condition of theproperty comes back, then when
we see the online stuff, we canreduce our bid.
If it comes back and there's$6,000 or $10,000 in back taxes,
we can reduce our bid and stufflike that.

Speaker 1 (20:27):
Okay, because you're going to have to catch them up,
right?
Yeah, essentially, it's a bigwall.

Speaker 2 (20:32):
Exactly, exactly.
We kind of figured that intoour bid to reduce it by taxes,
owed, okay, but if the propertylooks good and our little bit of
due diligence on the borrowerand the borrower responses and,
of course, the collateral file,which is this is really, this is
what we're buying right here.
This is a file on a note.
You know this is in Kankakee,illinois.
It was worth borrower wassupposed to pay $578 a month on

(20:54):
it and we paid.
What did we pay?
We paid 25 grand for this noteof $80,000.

Speaker 1 (21:00):
Come on now Come on, no, yeah,000.

Speaker 2 (21:05):
They were upside down , but we bought it at $25,000.
And so at $578,000 a month.
That's their P&I payment,$578,000 a month.
We figured this real fast$578,000 times 12 months, that's
$69,036.
That's a pretty good ROIdivided by $25,000, right?
What do?
We got that's a 27.8%cash-in-cash return to us.

(21:26):
Now we've got to take someservicing costs out of that
Still.

Speaker 1 (21:29):
You're still going to be over $20,000.

Speaker 2 (21:31):
That's what we shoot for.
We want to try we can get themback on track.
Shoot for at least a 20%cash-in-cash return when you
figure in servicing costs, yourservicing costs on a
non-performing, that's about 90bucks a month.
Performing, it's 25.
Um, if we have to foreclose,that's illinois.
It's not usually the fastest.
Avoid cook county like theplague.
But yeah, he's not bad so that'sgoing to cost us probably

(21:53):
another three to five grand toforeclose, you know okay, and go
from there.
So, um, but the my biggest goalis to like to rehab the
borrower.
You know, not rehab theproperties.
I've done plenty of that, westill will do.
There are still deals thatwe'll just buy to foreclose on,
to take the property back Ifthey're vacant or they haven't
paid in five years.
We know we're going toforeclose.
You guys have a little bit ofan older community up in

(22:17):
Wisconsin, in Green Bay, so wedeal with a lot of reverse
mortgages where the borrower isdeceased and nobody's there
paying.
You haven't paid in a couple ofyears, so we'll buy those and
have a big discount, with a notethat we're just going to have
to rehab them and go from there.
That's the thing I mean that'sthe great thing is you get these
lists from banks.
Most of the time you can justcherry pick.
Like I said, if we submit anoffer on 30, we're hoping to get

(22:39):
10 back.
If we close on two or three outof those, we're sitting very
happy.
For the most part, yeah 20%plus.

Speaker 1 (22:47):
That's no joke.
These days that's pretty toughto get.
So that's pretty awesome thatyou're able to do that and
sounds like pretty consistently.

Speaker 2 (22:55):
Yeah, I mean we bought over a billion dollars in
notes in residential andcommercial.
Commercial is a little bittrickier.

Speaker 1 (23:01):
Whoa.
Did you sell that?
A second Scott Back the trainup?
Did you say billion with a B?

Speaker 2 (23:06):
We bought over a billion dollars in distressed
debt since I started doing thisback in that's insane bro.
Yeah, I mean we bought a lot ofstuff during, you know, 2010,
2014,.
Miami condos for five grand.
You know what I mean.
It takes two years to foreclose, but it was still like I can.
I can throw five grand after a,you know, a 50 to $200,000

(23:27):
condo and let's sit there for awhile and see what it
appreciates back to.

Speaker 1 (23:31):
So that's insanity, bro.
So let me say this step one.
First of all, what you'resharing right now is awesome.
Like this is totally makingsense to me.
I've, I've, I've, I've been inthe note realm as far as hearing
about it Like I'm a note, I'm anote supplier, so to speak, as
far as doing some private moneylending and hard money lending,
and I've given people privatenotes.
I've been on that side ofthings.

(23:52):
I've never boughtnon-performing debt before.
So this is a whole new worldfor me, in which I think are,
I'm going to guess, 99% of ouraudience.
This is probably newinformation for them, and you're
breaking it down in a very easyway right now, which is awesome
.

Speaker 2 (24:05):
We're a much smaller community.
I mean when I started backdoing this back in 2007, 2008,.
There's not really a market forit.
I mean, there's people thatwere around in like the 80s for
the savings and loan crisis theRTZ Resolution Trust Corporation
, when all the banks werefailing and all this distressed
debt stuff like that happened.
And then 2008, when everythingcrashed, we saw more commercial

(24:27):
notes than we saw residential,because it took longer for the
residential stuff to hit themarkets as banks were filing
bankruptcy and delaying things.
Sure, With the commercialdefaults, we've seen that taking
place since 2020.
We've bought a lot of smallbalance apartment complexes,
even like 300 plus units that webought the debt at a big
discount and then stepped intocash flow or stepped into taking

(24:49):
over the complex and workingwith the bars to walk away in a
lot of cases.
Wow.
But it's a different market outhere.
I mean when we used to buypennies on the dollar.
Now it's not like it was 10, 15years ago, but it's still $0.40
, $0.50, $0.60 on the dollar.
What's owed is a good price.
To buy stuff off of value, notovervalued stuff.

Speaker 1 (25:09):
You know what I mean good price to buy stuff off of
value, not overvalued stuff.
You know what I mean.
Okay, got it.
So if I wanted to let's sayScott I was like, hey, I want to
go do this today, like I wantto start buying some
non-performing notes.
How do I get this tape?
Or how do you start, like,what's step one for somebody out
here listening to this thatsays like man, this sounds like
the lane I want to go down.
What's step one besides, getconnected with you to get some
coaching.

Speaker 2 (25:29):
Right, there's two paths, and that's one if you're
already targeting foreclosurelists, like you're buying a
monthly foreclosure list from alist provider, you can look at
that foreclosure list and thenlook at the lenders or banks
that are the foreclosure aspect.
Now I wouldn't target, like Isaid, the top five or ten banks
and if the foreclosure like herein Texas, we do everything so
fast.
If the foreclosure is nextmonth or in two weeks, I'm not

(25:52):
going to target that bank forthat property.
I don't care about the property.
What I care about is gettingthe right department in the bank
and then getting their list ofstuff all across the country on
a regular basis so that oneforeclosure at 123 Main Street,
I'll contact the attorneyforeclosing or I'll call the

(26:13):
corporate office, the bank andthe lender and depending on
where they're at and how bigthey are, they go by a couple
different names.
And so you can target thespecial assets department, the
secondary marketing department,the chief credit risk officer.
If it's an insurance or rate thewhole loan trading department.
Those are the four job titlesspecial asset manager, secondary

(26:35):
marketing manager, whole loantrader or chief credit risk
officer.
All right, and you can actuallygo over to LinkedIn and type in
those same names and findpeople that do all these same
jobs in the easiest way.
Right?
So that's two things, and it'slike just dropping a direct mail
.
Hey, I saw that you might bethe right person.
Handling note sales for ABCBank.
Do you have anything on yourbooks you're looking to get rid

(26:56):
of this month or this quarter?

Speaker 1 (26:58):
So good, all right, everybody, stop pause.
Go back, re-listen to thatagain.
Get those titles written down.
If you're driving earmark thispart, go back to it after you
got a spot with a pen and paper,because that was just some gold
right there.
Carry on Scott.

Speaker 2 (27:12):
Yeah, and that's the thing it's all about drip
marketing.
I mean, we spend a lot of timeon LinkedIn and follow up with
people.
Hey, what do you have in yourbooks this month?
Nothing.
You could also go back to thecounty records.
If you go back to therecorder's office and just do a
search for assignmentsassignment search in the last
six months or a year ago thatwill tell you what mortgages

(27:34):
have been moved from one lenderto another Cause.
It's not a deed, it's anassignment, a mortgage that gets
recorded at transfers ownership.
Okay so um, whenever I get atape in a list and that's you
know, we look at, okay, are wedirect to the seller?
That's important.
Who's the lender on this?
What's the motivation?
How upside down is the bank?
There's some things you can doby going to the FDICgov websites

(27:58):
or looking at the bank'squarterly report to see how much
distressed debt they have ontheir books residential,
commercial and how much of theirportfolio is distressed.
Okay, and that leads to gettinga better price.
The more distressed they are,the better price we can usually
get.

Speaker 1 (28:13):
Are you saying when you say the more distressed
you're talking about the bank,the more distressed the bank is
itself versus the actualproperty you're looking at
Exactly?

Speaker 2 (28:19):
You know the mortgage is distressed, obviously, but a
lot of banks when youunderstand banks.
When they have a non-performingnote on their books, they have
to hold money back in reservesthat they can't lend out.
That's why banks will oftensell to us at a discount because
they'd rather get 50% of thenote.
Now they can go out and rinseand repeat and leverage it.

(28:40):
10 to 15, 10 to 50 times versusholding on to this note.
It's going to drag them downand they have to keep these
reserves.
That's the thing to look at.
We don't target one-off banksbecause they can't take a big
discount.
We don't target the top five or10 because they do want you to
have $50 million.
But there's a whole lot ofregional banks, smaller banks,
smaller mortgage companies,mortgage bankers that have stuff

(29:03):
on their portfolio that they'remotivated to move off their
bank books so they can move itto somebody else and lend and
rinse and repeat and lend on aregular basis.

Speaker 1 (29:13):
I love that.
I love that when you're doingthe, the due diligence Scott you
talked about, right, you've gotthe BPO, you're getting done,
so you're really getting a truevaluation on the property, right
, are you?
Are you able to go in theproperty ever, like, are you
able to get in there and see,like, what is the condition of
this thing inside?
Cause that can be a big swingif you got to flip that thing.

Speaker 2 (29:32):
Yeah, well, that's a great question and that's the
number one question we get fromfixing flippers, cause you gotta
have the whole, I gotta seeeverything Right, and the answer
is most of the time, no.
If it's occupied, you're notgoing to be able to go.
Knock on the door.
Hey, can I walk in and see theproperty?
You know I to be able to knockon the door.
Hey, can I walk in?

Speaker 1 (29:49):
and see the property.
I'm the bank.

Speaker 2 (29:50):
Yeah, exactly, they don't do that Now sometimes now,
of course, if that borrower'slisted that property for sale,
then you get online photos.
You can finagle about that.
If the borrower has passed awayand it's a reverse mortgage,
oftentimes HUD, before they'reselling the stuff off, will go
in and take photos and send inan inspection and take a look at
it.
You can't go knock on the doorof the borrower and say, hey,

(30:10):
I'm thinking about buying yournote, can you start paying on
time again?
That's a violation of fair debtcollection practices.

Speaker 1 (30:16):
Although, the CFPB is not really around to step on
your toes or swat your hands.

Speaker 2 (30:23):
You shouldn't do that .
But the thing about looking atan asset is that we're literally
getting the.
You know the phoneconversations we're seeing hey,
this borrower called in andtried to talk about doing a loan
mod, or the opposite way.
We called the borrower and theytold us to F off.
You know what I mean.
That's why we sent somebody byto look at the property.
Is the property in goodcondition exterior-wise?

(30:44):
Is the lawn mowed?
Are there toys in the frontyard?
Is there an American flag outin front?
Is it a good neighborhood or isit the hood?
Those are important things.
One thing that offsets that fearof oh, I got to rehab, or if
it's trashed outside, is theinsurance side of the business.
When we buy a non-performingnote, if the borrower has

(31:07):
insurance which we ask as partof our due diligence they don't
Then what we do before we fundis we'll put insurance on the
property.
So if we do, when we do closeon it and the borrower is not
responsible, we go knock on thedoor.
Then, if they don't answer, ifit's vacant, we can actually
we're allowed because we're thebank to go in, open the door,
change the locks make sure tosecure our investment, just like

(31:30):
Fannie or Freddie would do on avacant property.

Speaker 1 (31:34):
Any property going up for auction same look, Exactly
so if it's occupied, it's great.

Speaker 2 (31:38):
I mean, that's where we're calling the utility
department, seeing the city, andsince we're the bank and the
lender, oftentimes the utilitydepartments will give us more
information because we have avested interest.
Okay, so, like hey, we're thebank, we're calling to check on
123 Main Street.
Corey is the borrower on this.
Can you tell us if theutilities are still on?
Is the water still on.
Oh, it's been turned off.

(31:59):
How long has it been turned off?
What's the outstanding balancethat we would need to pay you
when we do that?
And so they'll give usinformation?
I had one lady like oh yeah,they were in here last week.
Him and his wife were fighting.
They got in a fight.
We had to call the cops on them, or you know, it's been the
same borrower at the house forfour years.
They paid on time.
So that tells us a little bitabout the interior condition of

(32:22):
the property.
I mean, I know we're going to.
Usually, if we do take theproperty back, it's going to be
paint, carpet, new appliances.
90% of the time you know what Imean.
Since we aren't targeting theproperty we really base our
first line of return on.
Is it occupied?
And what's it going to looklike if we can get that borrower
back on track, if they juststart paying?
Is that a good day or is it abad day?

Speaker 1 (32:44):
Yeah, and going from there, you mentioned something I
think is interesting for theaudience to hear.
Scott, you said something aboutlike, and maybe you can expand
on this a little bit.
There was something about phonerecords or something you get
with this, where they'llactually put notes in the system
on this particular borrower andyou get those notes if you're
doing your due diligence.

Speaker 2 (33:02):
Yeah, it's called servicing notes.
So most mortgage companies aregoing to be servicing a note by
calling if you stop paying,right, okay.
So I mean we'll see the paymenthistory.
You know all that stuff in thespreadsheet.
If what they paid over and thatkind of things, which is really
nice, but somebody hasn't paid,then we're really especially a
non-performing.
We're going to look at what'sbeen the conversation.
Has the servicing company beenreaching out?

(33:23):
What's the conversation been?
And we'll see notes like barcalled and tried to do a loan
mod.
Bar called and tried to do ashort sale okay, you know even
since we get this collateralfile a lot of times, sometimes
we'll even get like hardshipletters that the borrower sent
in.
So, like one, I bought thisnote in south beloit, illinois a
few years back.
Where the file went.
Uh, the scan file was thousandsand thousands of thousand pages

(33:44):
like why is this collateralfile so thick?
You know, and turned out thisloan had been sold like five
times over four years and thelady was trying to do a loan mod
and so she was faxing in herw-2s, her hardship letter, her
bank statements, all the stuff,trying to get a short sale
approved okay and every time shedid the note would be sold to

(34:06):
somebody else, so she'd have todo the whole thing again, oh my
goodness.
So when I saw this I was like,oh, I'm like they owed 60.
The house would maybe be worth36.
It wasn't that high value asset, but they were willing to sell
like 30 cents on the dollar ofwhat they figured, 36 cents on
the dollar of what was owed.

(34:26):
I'm sorry of the value of theproperty, 60 was owed, 36 was
the value, so they sell the noteto me for 12 and her monthly
payment was like 452 a month andI'm like, look, I'm like this
lady's been trying to do a loanmod for four years.

Speaker 1 (34:38):
Yeah.

Speaker 2 (34:39):
She's lived in it for 18.
In her hardship letter sheliterally we raised our three
daughters here, my husband had aheart attack, has been out of
work.
She literally said I can'tbring the full four years or
five years of back payments tothe table, but I can start
making on-time payments.
I get paid a little bit extra.
She literally even outlinedthis in the hardship letter.
I'm like I'm buying this note,so we bought it for 12.
The day after we funded on it Icalled her up and her name was

(35:05):
Sheila and William was her name.
I'm not going to say the lastnames, but I can remember
talking to Sheila.
She picks up the phone.
I say hello, sheila, my name isScott Carson.
I'm in reverse acid fund.
I'm calling about your propertyand she's like oh, my God, yeah
, so well, we just bought yournote.
She's like oh, you can literallyjust like, oh, shit, I don't
have to go take it again and Ilike, listen, I understand,

(35:26):
you've been trying to do a loanbonus for a while.
She's like, yeah, yeah, I saidit looks like your loan's been
sold like four times in fiveyears.
She's like, yeah, I said, firstof all, how is your husband
doing?
How is William doing?
Is he back to work?
She's like, oh, you actuallyread my hardship letter?
I'm like, yes, I did.
Is he back to work?
Yes, you owe 60.
The house is 36.

(35:47):
We know you owe 60 because youpulled a little cash out when
the value went up a little bit.
You know Southport is a littlewhite house, you know I said
what did I say?
I said this is going to be agood day.
Can you start paying at $450 toa month?
She's like, yes, I could dothat.
Can you bring $5,000 to thetable?
You know it's a full year.
She she was behind by fiveyears.
She was like, oh, I can't bringfive.

(36:08):
I said, well, can you bring2,500 to the table?

Speaker 1 (36:10):
She's like.

Speaker 2 (36:11):
I can do that.
I said can you pay anadditional 200 per month on top
of your 452?
She's like yes, I can do that.
I said okay, this is what we'regoing to do.
You bring 2,500 to the table tomy attorney's office about an
hour south of you.
You're going to start making a652 payment for the next year.
After 12 months of on-timepayments.

(36:33):
We're going to appraise yourproperty and we're going to
reduce what you owe down to thetrue value.
So if it goes from 36 to 30,I'll drop your balance to 30.
If it goes from 36 to 45, we'lldrop it from 60 down to 45 for
you.
So we'll even take off some ofthat negative equity.
She's like are you serious?

(36:53):
She's like yeah, and here's thekicker for you, sheila, you do
this on time.
For 12 months, I'm going todrop your interest rate from
9.9% to zero.
She's like what are you talkingabout?
I said zero and we want to makeon time payments for months and

(37:15):
we'll drop it down because thatway you will have the house paid
off in 72 months instead of 33years, and I didn't want to own
this $36,000 asset, right, but Iwanted to make it good.
So if you figure the numbers, Ipaid $12,000.
I basically got 90% of my moneyback in that first year and
then she paid on-time for sixyears, never missed a payment.
If she was going to be like aday late, she would call me like
Sheila, you don't have to callme, call the servicing company

(37:35):
who you're mailing the checks to.
And 12 months after we modified, dropped it to zero.
It was like around Christmastime.
I got a Christmas card from herand her family.
It was a picture of the wholefamily and I noticed that one of
her daughters in there had ababy, okay, and I noticed that
one of her daughters in therehad a baby, okay, and she's like
.
We just want to say thank youfor allowing us to stay in the
house and working with us.
Our daughter, our oldestdaughter, who she raised here,

(37:55):
had her first child and we namedit Carson after her.
No, come on, dude.

Speaker 1 (38:00):
Seriously, did that get you teared up, brother?
Oh my God, I get chills everytime I tell this story, man.
Yeah, dude, that's crazy.

Speaker 2 (38:07):
You know we have the ability to help people stay in
their houses.
We prefer that.
I want to About 70% of the timewe keep people in the house.
I mean, look, I'm a capitalistpig, just like everybody else I
want to make a good return.
Okay, you know I made 85% yearone on that deal with Sheila and
I think I made like 20% goingforward after that first session
.
She made a ton of money.

(38:27):
I mean there's one lady who wasa single mom of four kids in
Cleveland.
Her house was a POS.
I mean I didn't want to own itbut her husband left her and all
this stuff.
She's trying to raise four kidsbut trying to go to nursing
school, okay.
And so we literally forgave her$20,000 of what she owed on
this property and just deededher the property, the release of
lien.
I says Merry Christmas, happyNew Year.

(38:49):
I paid like a grand for itbecause it was part of a bulk
deal.
I was like I'll just write thatoff.
I mean I'm not worried aboutthat, I don't want to own that.
That's the beautiful thingabout helping people.
Now, sometimes people are justscumbags.
We bought one down near Miami acouple years back.
The house was worth.
We bought about a million.
They owed 1.2 on it.

(39:11):
They hadn't paid in four years,doing every crazy trick in the
book they could to delay theforeclosure process, because
Florida is about a 12-monthprocess to foreclose in a good
time.
Well, guess we bought this noteat 440.
Borrower was playing tricks,then COVID kicked in.

Speaker 1 (39:30):
That delayed foreclosures.

Speaker 2 (39:32):
Yeah, that was a big delay, that kind of.
We didn't expect that.
So it took us another two yearsto foreclose, two and a half
years to foreclose.
We finally foreclosed.
We took the property back.
They'd moved out, it wasimmaculate property but they
took about $50,000 worth ofrehab, dupliances and some other
stuff, but we listed it for$1.25.

(39:52):
We sold it for $1.1 with anoffer basically in 10 days, and
when you add in legal fees oftwo years and going back to
shenanigans, our cost basis wascloser to about $800 on that, oh
my goodness.
So back of shenanigans.
Our cost basis was closer toabout $800 on that, oh my
goodness.
Still a very good day on stufflike that.
You got to expect that youstart getting higher valued
assets.
Borrowers are going to hireattorneys to delay foreclosures

(40:15):
and expect that.
We like to find that really thecookie cutter.
The best bang for your buck isgoing to be from that.
Really $100,000 up to about$250,000 price range for the
most part.
If you want to turn into cash,you can buy stuff less than that
.
Contract for deeds we buy a lotof those as well too.
For cash, sure, but reallyanything above that you're
probably going to have toforeclose for the most part Okay

(40:36):
, okay, got it.

Speaker 1 (40:38):
Wow, man, that is crazy.
So you guys bought it.
For what did you say $440,000on that $441,000.
And you racked up what was that?
Almost like $350,000?
.

Speaker 2 (40:48):
Well, I take that back.
Our payoff was that because wedid have an investor funded to
the deal at 12%.

Speaker 1 (40:52):
So he funded the deal .

Speaker 2 (40:54):
And that was with interest.
But we did have roughly, golly,we had $75,000 to $100,000 in
attorney fees for just holdingand go on that route during the
process.
So but we knew that I was like,when we buy this, this guy is
going to probably drag it outanother two years.
And then COVID kicked in.
I was like, oh, thanks God.
But we knew we bought it right.

(41:16):
You know like, okay, I'm, I'mwilling.
You know, we had the attorneyreview, all the legal beforehand
.
So they said, yeah, this is,guys, just a creep, he's going
to drag it out, he's going toplay on it.
He showed up, said he was dyingof cancer.
Then he showed up to the judgeand said he didn't speak any
English, which was out in thelobby speaking fluent English.
There's some scumbags out there.

(41:36):
I don't mind foreclosing onthose folks, yeah for sure.

Speaker 1 (41:39):
Talk about real quick , scott, I want to go into short
sales real quick.
So first of all, for theaudience that is not familiar
with short sales, these were bigback in 2010 to 2016,.
Really, we don't really seemuch of them anymore.
But can you just explain whatis a short sale in general terms
?

Speaker 2 (41:54):
Yeah.
So short sales, I mean we'restarting to see more come back
though in different marketsbecause of values kind of
depreciating a little bit ormarkets kind of coming back Like
Austin we've had a little bit.
Or markets kind of coming backLike Austin.
We've had a little bit of, theysay, a crash but its value has
kind of dropped down 5%, 10%negative growth for the last
year or two because of themarket.
But a short sale is where aborrower owes more on their

(42:15):
property than the property'sworth.
So let's just go back to thatsame number we gave.
So it's a $200,000 house.
That's what the value is rightnow.
If they haven't paid in a year,or maybe the market dropped,
maybe they owe $225,000.
Okay, and they don't have the$25,000 in change in their
pockets to pay at closing tosell that property.

(42:36):
Right, we've always got tofigure about 9% to 10% for
closing costs and commissions ona property anyway.
Yep, so if we bought that noteat $100,000.
Okay, I'm the bank, I can kindof help determine the short.
You know me taking a shortreally isn't me taking a short.
But a short sale is where theborrower or the it works with a
realtor to go to the lender andsay, hey, borrower's in trouble,
borrow can't pay.
We'd like to try to sell thisproperty below what's owed on a

(43:01):
technical kind of short Right,so the lender has to approve.
You often see these lists in theMLS as third-party approval
required.
They should be listed no moreat 85, 90 cents of the dollar
because you want to get foottraffic in People looking at it.
If they're going to have towait around for a short sale to
take place for 90 days of goingback and forth negotiations, you
want to do it at a discount.
Me, if I buy a note and I seeit's listed for sale or the bar

(43:25):
wants to list it, I'll buy.
No, okay, I bought it at $100.
Okay, I'll let you list it for$180.
It's worth $200.
I'll let you list it for $180.
Let's get multiple bids to bidit up to $190, $195.

Speaker 1 (43:46):
Yeah, I'll gladly take a short of $30K $40k off
what's owed, because I know I'mgonna make 70 80 in the back end
, right.
What's interesting is I thinkyou're playing chess when, when
other people are playingcheckers here with this, because
where I'm going with this is uh, we, we run into this, you know
not often, but I would say atleast once a quarter, maybe
twice a quarter.
One of our, one of our sellersis in a predicament where they
owe.
We just had one down in theMilwaukee area.
They owed 170.
We put it out to the buyerslist just trying to help them

(44:09):
more than anything for, like, Ithink it was like 175.
Like, our normal spread ondeals is 20 plus.
We're not trying to takeanything less, but this we're
like let's just see if we canhelp out.
Couldn't get anybody to buy itat those numbers.
We had it set up that theycould do subject to, so they
could take over the mortgage,catch them up on payments, like
we had all these options right,try to help these people out.
Nobody was biting Right.
So we went to to a realtor thatwe know that does some short

(44:32):
sale negotiations and they triedand the bank wasn't willing to
do really much on it.
I don't remember, I don'tremember.
But what I think is interestingis you're you're kind of
bypassing that step.
It seems like of let's gothrough the realtor to try to
negotiate with the bank and tryto do a short sale here on the
borrower's behalf, and you'regoing to the bank and providing

(44:53):
value and saying, hey, you'vegot this distressed asset, I'll
take it off your plate for youat this, versus just them going
through this, because most ofthe short sales I've run into is
like if you're less than 80% ofwhat they perceive the value at
, they're not willing to playball.
Where you're getting them at40% to 60%, it sounds like.

Speaker 2 (45:12):
It just varies.
Yeah, vendors on alender-by-lender basis If
there's a ton of equity, we'renot going to get it.
We'll probably get a comment at90 cents of what's owed, even if
there's a ton of equity.
Okay, you know we don't chaseequity a lot of times.
Now we did have.
We had one deal recently.
The borrower was in the house.
A little old lady had been inthe house by herself for 15
years.
The house was worth $450.
She only owed like $175.

(45:34):
Okay, and I think we paid like$125, $150 for the note.
It was still a pretty good deal.
In Texas we can foreclosequickly.
I'm like well, if we foreclose,we're going to get $175,000.
That's about $50,000 before wepay our investors off.
I said we're probably going toget outbid at the auction.
There's no way we're going toend up taking this asset back at
$450,000, which would be greatbecause we could make a ton.

(46:00):
So what we did is we bought thenote.
We want to go.
She's like well, I don't wantto stay, but I'm worried, I
don't want to Nestle.
I mean, she's old enough shecould have done a complete
reverse mortgage and stayed inthe house.
We could have stayed, we couldhave offered that.
Didn't want to do that.
I said okay, what if we do afriendly foreclosure?
She goes what do you mean bythat?
I said how about we give yousome cash to walk so we avoid it

(46:22):
going to the foreclosureauction and getting outbid and
somebody else making the lion'sshare of the profit?
So she's like what do you havein mind?
I said well, we went back toHeaton a little bit.
I said how about we give you$75,000 to sign the property
over and walk away?
And she's like that would begreat.
So we gave her a grand to sign,got her out of the house, got

(46:43):
her into an apartment.
She still had some money andsome friends.
We got into that.
Then, since we were the bank,she deeded the property back to
us.
So now we didn't have to worryabout foreclosing because we did
a friendly foreclosure with her, put 20 grand, rehab, paint,
carpet, new appliances, enlistedit for 450.
And it got a full price offerin seven days.
Oh my goodness, so we ended upmaking more money on the on the

(47:03):
backend side of that versus justthe 50 grand.
And we actually did some good,gave her some cash because,
right, it's a thing Noteverybody would have done that.
Most people would justforeclosed and she wouldn't
probably not gotten anything atthe option Right Um, and run
that risk.
In this way we were able tohelp a lady out, uh, make some
lemonade out of lemons.
You know what I mean.

Speaker 1 (47:26):
Yeah, man, I love it, Cause what you're able to do is
everybody's winning.
That's always what I always sayis a great real estate
transaction was.
Everybody leaves that thattable feeling like they all won
right In some aspects, right.
Nobody's feeling like they gottaken advantage of or anything
like that.
And and in our business, in thewholesale business, you know
that can sometimes some some,you know you meet with the
sellers, then they get sad orsomebody talks to them and then
they want more money and that'swhen sometimes our deals can get
a little messy.

(47:47):
But typically these people arethanking us up and down at the
closing table and they'reexcited and we're excited.
And sometimes real estateagents that I talk to they think
we're the scum of the earth andwe're ambulance chasers and all
this stuff.
They don't understand.
They don't get to see thesesellers in tears when they're
getting this problem propertyoff their plate and they didn't
have to go through thetraditional route and that kind
of thing.
And you're doing the same thingwith notes here.

(48:08):
It sounds like you're able tocome into a position where
somebody's stressed out of theirmind about getting foreclosed
on and what it's going to do totheir credit and are they ever
going to be able to get a placeand blah, dah, dah, dah dah and
you and make a profit for youand your investors.

Speaker 2 (48:22):
Yeah, exactly, I mean .
That's the thing I mean.
If you think about what damagea foreclosure does, not only to
a block but a market, it reallydepreciates the whole block
$10,000 in value on aforeclosure, or more, depending
on what happens at the auction.
We're able to kind of keep thatup Instead of foreclosing.

(48:43):
We can still do a friendlyforeclosure and then the price
isn't listed anywhere and thenselling it at full value after
we cleaned it up boosts theactual economy, boosts the
valuation and stuff like that.
But there's still people thatyou know we still have to
foreclose on 25, 30% of the time.
They don't want to work with us, they don't want to communicate
.
I had a guy just recentlycalled me the week after the

(49:04):
foreclosure auction.
Isn't it always when peoplecall off a foreclosure list,
they call the week after theauction?
Hey, I need help.

Speaker 1 (49:10):
It's too late.
Now I want to work with you.
It's like well, buddy, what areyou doing?

Speaker 2 (49:13):
It's too late.
I'm like man you didn'tcommunicate with us for two
years.

Speaker 1 (49:20):
I said I'm not, I don't feel sorry for you.

Speaker 2 (49:21):
I'm like I'm sorry man, I don't feel sorry for you.
We sent out door knockers.
We flew a plane by.
Please call us at this numberUnfortunately and that's the
thing is too people always askme what does the market foretell
?
Are we going to see moreforeclosures?
You're not going to seeforeclosures.
You're going to see more thingswhere banks are selling the

(49:42):
portfolios of the debt off toinvestors like me because they
don't want to be on the hook forthe foreclosures and it costs
them a lot more to rehab theproperty.
It's vacant for a while.
A vacant property is anon-performing asset.

Speaker 1 (49:54):
Banks don't really want to own foreclosures,
whether you believe it or not,they learned that in 2008.
They don't want to own them,nope they do not want to own
them.

Speaker 2 (50:04):
Nope, they do not want to own them.
Calling the bank, say I want tobuy Arias, they're just going
to send you to a voicemail box.
But if you reach out to theright department of the banks,
like I said, and say, hey, Iwant to buy your non-performing
notes for my own portfolio Imean you can wholesale notes
just like to hear you say, hey,we're trying to keep people in
their houses.
If they won't play ball,obviously we'll foreclose and go

(50:26):
that route.
But since we're kind of thatsmaller war dogs living on
crumbs kind of mentality aspect,we have a lot more flexibility
in what we can do and some moreoptions that we can offer the
borrower to try to work withthem.

Speaker 1 (50:38):
Yeah, that's awesome, scott.
Well, somebody wanted to getsome help on this stuff, scott,
because this is awesome.
This podcast has been great.
This is one of my favoriteepisodes so far, because I'm
learning a ton about this wholedifferent world in real estate.
I know you have Monday nights.
Are you still doing the Mondaynight program?

Speaker 2 (50:55):
Yeah, we've got a ton of videos.
We've got the number oneYouTube channel, number one
podcast out there with the NoteClosers show, stuff like that.
We broke down 187 notes lastMonday night for people to take
a look.
We're only one of the fewpeople out there that actually
will bring up a tape andliterally go through hey, here's
where the deals are, here's theduds.
Avoid this and avoid that.
We've got a free course, a freethree and a half hour course for

(51:15):
you to learn about the basicsof note investing.
If you're interested, just goto noteweekendcom.
You can register.
It'll send you the reply.
I actually just taught it livethis last Saturday for three
hours to people on how to find,fund and flip these deals.
And then, of course, we havequarterly classes and coaching
and stuff like that Awesome.
If you've really liked this,you can use your IRA, you can

(51:37):
use OPM.
Don't let what you have ordon't have in your checking or
savings account stop you fromdoing, because there's a lot of
good deals out there and you andI both know, corey, we wouldn't
be where we're at if we justtry to use only our money over
the years, right you?

Speaker 1 (51:51):
know, use other people's money.
So that's right.
That's right, I mean.
I think that's such a great,great point to make, because I
think that's one of the limitingfactors when, for 99 of people,
not we don't have rich uncleswho gave us a bunch of cash and
we weren't blessed with trustfunds.
It's all self-made.
And you got to realize Iwouldn't own over 100 doors just
with cash that I had sitting inthe bank.

(52:11):
It doesn't happen without usingprivate money or leverage or
creative financing or communitybanks that will fund it all.
There's a million differentways to do it.
So if you've got grit andyou've got a strong intensity to
change your life, it's allabout getting connected with the
right people who've alreadydone this before, and Scott's
one right here that we've we'rebringing to you guys today on
the Wisconsin investor that hecan help you guys and guide you,

(52:32):
and I'm definitely going to begoing out there to note
weekendcom and I'm going to begetting myself that little three
and a half hour course and well, you and I have already talked.

Speaker 2 (52:38):
Anything I see up in your neck of it's Green Bay,
wisconsin or Milwaukee, I'mgoing to shoot it to you.
Let's go, buddy, and partner upwith you on some of these deals
.
For you, we'll do a little casestudy.

Speaker 1 (52:47):
then, scott, we'll promote that baby out to the
audiences and show them how wedo it.
Go from zero to one.
Let's do it, man.
If somebody wanted to get intouch with you, scott, what's
the best way?
If?

Speaker 2 (53:04):
you go to our website weclosenotescom is always the
easy spot there or you canalways book a call directly on
my calendar on there by goingand just booking a call with me
or going totalkwithscottcarsoncom.
That'll take you directly to mycalendar and book a phone call,
and I'm always glad to let youpick my brain for 30 minutes or
ask me questions.
It's a great thing.
It's not for everybody.

(53:24):
I'll tell you that right now.
If you're an engineer and havean engineering mindset, you
might freak out all thedifferent opportunities,
structure and stuff like that.
The riskiest part of noteinvesting is making sure you're
buying the right price.
Never buy a note you don't wantto end up owning.
Always check taxes, alwayscheck title.
If you do those things, you'regoing to be pretty well off

(53:47):
because most times you're buyingat a discount.
Worst case, you sell the noteto somebody else and get paid
back and moved on.
There People screw up becausethey come from.
I got to do everything myself.
I got to handle the workout.
I got to try to handleforeclosure.
I'm like no, no, no.
Pay the 90 bucks a month to aservicer, pay the attorney their
two grand or whatever.
Let them foreclose and let'smove on.

Speaker 1 (54:07):
You don't run a charity.

Speaker 2 (54:09):
You donate to charities because people will
try to drag the shit out.
Oh, you don't want to forecloseon me?

Speaker 1 (54:19):
Yes, I do you no, pay you, no stay.
You know what I mean.
I love it, man.
Well, we've been talking a loton the recordings lately about
one of my favorite books who,not how, and that's what it
sounds like as we were talking.
I'm like, well, this soundslike a who thing.
I could get a VA.
My brain is going like I couldget a VA to get all the basic
stuff.
Then all I got to do is makethe final decision.
Then we got a servicing company, a title company.
It's just a who thing.
Help structure that for anybodywho's interested in.

Speaker 2 (54:41):
So it's pretty easy.

Speaker 1 (54:43):
Scott, we always wrap up with a with, with a little
fun question here, and I know Iprepped you a little before this
because you're from Austin,texas, but you did have a pretty
good one when I asked you thefinal question the favorite
place to visit or Wisconsintradition.
Tell the audience a little bitabout what you got here, man.

Speaker 2 (54:57):
So my family's originally from the land of
10,000 lakes, your neighbor youknow to the.
West Minnesota.
You know I was born inRochester and Stewartville and
stuff like that and I'm actuallygoing back up there here in a
couple of weeks.
But one of my favorite memoriesas a young kid I love apples, I
love fruits going to an applefestival right on the border.
We're in Wisconsin, some citynamed last Valley you mentioned

(55:20):
it and I think Hudson.
I think Hudson Valley and Iremember walking through this
apple festival and there'sliterally like hundreds of
booths of apples.
It was like I remember eatingso many apples I got sick on the
way home and stuff like that.
But you know, my mom and I gotan uncle that lives in Wisconsin
and you know there's nothingbeats good cheese curds.
It's just one of the greatthings.
When you get a good cheese curdup there, the milk tastes

(55:43):
different.
You know, when you get a goodcheese curd up there, the milk
tastes different.
Just the greenness of it.
The farmers in the dairy landup there are the salt of the
earth.
We've got to protect thosefolks.

Speaker 1 (55:51):
I agree 100%.
I agree, guys, if you've gotsome value out of this and you
want to help the audience orhelp other people get started in
real estate, share the episode.
Guys, go out and follow Scottas well.
I mean he's got tons of greatlike.
If you don't know where tostart, this guy's got a ton of
content he's cranking out so youwill not fall short of any kind
of education gap here.

(56:13):
If you follow Scott, so gofollow him on his different
platforms and on the links thathe gave us.
We'll put all those in the shownotes as well.
So if you forgot all those,we'll have those in there.
And then if you guys share thisepisode, remember that's going
to help you guys raise privatemoney.
It's going to help people tellyou what you're into.
They're going to know you'reinto real estate investing and
you're going to start moreconversations.

(56:33):
That is ultimately going tohelp you build your network out
there.
So if you're not ready to get onthe buyer's list, like I
mentioned at the start, but youdo want to just start having
some conversations like this,obviously Scott made a generous
offer today we're also willingto help have some conversations
about how to help you getstarted here in Wisconsin on
some of your real estateinvesting.
You can just go to thewisconsindiscountpropertiescom
website, just go to the ContactUs page or give us a call on the

(56:55):
website on top and we'd behappy to have that conversation.
If you're not quite ready tostart evaluating deals yet,
scott, this has been awesome man.
I appreciate you being on,brother.
Any last words for the audiencehere before we roll.

Speaker 2 (57:05):
Just get out for your ass and take some action.
You know, no matter what it is,reach out.
Those that are most successfulare the ones that are most
giving of their time to helpensure you, make sure that you
avoid the pitfalls or thehurdles that we hit when we get
started.

Speaker 1 (57:17):
Yep, awesome buddy, appreciate you being on.
Thanks guys for listening.
We'll see you on the nextepisode.