The year 2020 nears its close, and it is a year almost everyone would want to forget. As the new year dawns upon us, Chris Seveney looks ahead full of positivity by presenting his top three 2021 goals. Together with Jamie Bateman, he dissects his plan for the new 365 days the next year has in store, all focusing on mentorship, relationships, and business growth. Chris also shares how he keeps track of his goals, where he gets his motivation, and a couple of tips on how other note investors can start determining their own 2021 plans.
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Chris Seveney’s 2021 Goals: What Next Year Have In Store
Chris, how are you?
Jamie, how are you?
I’m good. What’s new? What’s going on?
It’s been good for me. I’m rolling right into trials and tribulations. First, I give myself a little pat on the back. I finished my thesis, so I can finally get my Master’s in Real Estate Finance and Development. That’s an honor to finally finished that. I joke with my sister who has been a stay-at-home mom after getting a Master’s in Psychology that now, I’m as educated as her. That was a little internal. People who know me can have a little bit of sarcasm in me, and my family is witty. We sometimes give each other a little bit of flack.
Sarcasm and a competitive streak a little bit.
I’ve got a little bit of a competitive streak in me. Some crazy stuff happened, knock on wood. This property that I have going to foreclosure has a buyer who’s supposed to close. They’re supposed to close a few weeks ago. That would be a nice win there. The loan they had borrowed hadn’t paid in thirteen years. I got a loan modification, so I’m getting that one board. That’s probably a record right there. Two payoffs, a settlement agreement, and another foreclosure threw out of court. This one is in NSC where it was a CFD. They filed it and then it got thrown out because they wanted it filed through a different process. It was procedural more than anything.
The borrower who hadn’t paid in thirteen years, were there any issues there with maturity date or statute of limitations or anything?
Potentially. The loan had not matured but the guy had different life circumstances. It was a win-win because he’s going to renovate it. He’s probably going to flip it. He’s going to make money on it, which I hope he does. I’m going to make some money on the deal as well. It’s one of those things where if I would have stuck to my guns and did the entire payoff, it would not have been in his best interest at all. I took close to $75,000 or $100,000 off of what was owed. If I didn’t then there was nothing there. Why would he? I wanted to make it appealing to them as well. That’s one of the things in this business is you got to look at things from different perspectives. You need to look at it full 360 to see, “Does this work for that individual?” That’s the whole process behind the good deeds is you’re trying to make everything a win-win for people. In this instance, I believe we did. What about you?
I’ve got a few things going on. I don’t know if this is on your radar at all, but the New York loans are all supposed to be boarded or at least start the boarding process with FCI. We’ll see how that goes. I had one that took over a month between the initial boarding date and then the final boarding process. I don’t know why that took so long. We are on the rental side of things where we’re refinancing a couple of commercial loans that we have on our Maryland properties. I figure this was a good time to do that being solo. I’m working on our FPI processes still. I’ve mentioned that before. I also had a $96 million tape come across. I’m curious to check that out.
I thought you were complaining about it.
I was. I need to complain more because I complained and then the tape showed up.
I can’t take all of it down.
It’s a little different. It’s more conventional/FHA/VA stuff. I’m not sure.
The one that’s $.90 on a dollar.
I still want to check it out. Before we get started on the main topic, I had somebody sent me a question. This is a pop quiz for you, “I’m selling a small note via Paperstac and the person that wants to buy it agreed to a price. They provided investing information to close but they never requested any collateral, pay history, title, or anything at all. Can I as a seller be scammed? Would you have any concerns with something like this where the buyer never requested much information other than what’s on the listing page with Paperstac?”
I wouldn’t settle whether or not it’s a scam. Is it performing or nonperforming?
I’m not sure.
I had this on Paperstac. It’s a non-performing asset and the person put it under the agreement. He was like, “I’m ready to close.” I’m like, “You didn’t ask for collateral. You didn’t ask for anything.” The loan had a lot of hair on it. I canceled the deal because the person clearly doesn’t understand note investing. What I don’t want to have in six months’ time is somebody will post on Facebook, “I bought this asset and now I’m being sued because I bought it from Chris Seveney.” It’s because this person didn’t do their due diligence or whatever it may be. I’ve had people on Paperstac ask me for the borrower’s phone number and contact information as part of the due diligence so they could reach out to them and see why they’re not paying. I’m like, “You can’t call a borrower.” Stuff like that is a big red flag for me. I want to sell to people who know what they’re doing. If it was a performing note and there was something in the description that says clean title and it was a little balance, maybe I want to take the risk. Typically, that’s a sign that the person clearly does not know what they’re doing.Consistency beats intensity in the long-term. Click To Tweet
I’ve had a couple that it was their first note. I walked them through the process and told them, “This is what you should be asking me. Let me help you out here.” This seems like a little more extreme than that. That was a little curveball question for you.
What about you? What would you do?
I agree, it seems odd. It seems like a red flag. I wouldn’t sell it without further communication. I don’t think I would sell it to them either.
I almost wish, maybe I’ll recommend this to Brett on Paperstac, that people took a survey and next to their name, give a little rating for how many notes they’d either bought in general or at least on Paperstac because they can track that.
It’s like on Airbnb. You’re reviewed as a host and as a tenant.
That would be a good idea. Maybe we’ll mention that to Brett.
We’re supposed to be on their podcast but we had some technical difficulties.
I’m more upset that he had you before me because my ego can’t take that stuff.
Our main topic is Chris’ goals for 2021.
Also, what I do with them. I wanted to go through them in a specific order. It’s interesting because first I want to start out by hoping this show inspires people. This is not meant for me to talk to see how impressed I am or anything like that. I have in front of me, my goals from 2019 and what I planned for that year. In two years, the strides you make and people ask, “How do you do it?” I mentioned this to someone. It’s simple, I get up in the morning, have breakfast with my family, have a cup of coffee, come downstairs, do my work, and then have lunch, do my work, have dinner, do my work and go to bed. We all do the same thing every day. It’s a matter of how you manage that process.
I’m not smarter than anyone else. I can say I’m probably a little more ferocious, passionate and that’s my drive. I said it because in 2019, my goal was to acquire 60 notes and raise $1.2 million, and have a monthly cash flow of $2,500 a month, which is $30,000 a year. That was 2019. I’ll be honest with you, I crushed that goal. I double the volume by about 50%. It is where I hit that goal. I set that as the baseline because we’re going into 2021 and over two years, it shows how you can expand and grow a business. It doesn’t have to be to this size or whatever it may be, but just the baby steps. The other thing I’ll mention is in that target, I had 2022 goals, which were 200 notes, $5 million raised and $10,000 in monthly cashflow. I also had 50,000 downloads on the show. I undershot that one.
For many who may have known, I redid the website and I’ve started to branch out into doing some management for people as well as mentoring. My mentoring program is a little bit different than the other programs out there where you come to spend a weekend with me and I charge you tens of thousands of dollars. It’s on an hourly basis as needed to go through the process and steps. It’s not for somebody who’s brand new to the business. It’s somebody who’s got some education but is afraid to take that leap or make a mistake when they buy that note. My first goal is I want to mentor 25 people in 2021. I’ve got five people already signed up that I’m working with already. My goal is to mentor 25 people. I want to co-elevate people. I want to take people in this business and we all rise together. That is what I’m trying to focus on. My theme for 2021 is co-elevation. My little one-page business plan, whoever has downloaded it, that is the theme name, co-elevation. That is number one, to mentor 25 people.
Do you want to talk about briefly how that’s gone so far? Is it a little too early to say?
It’s interesting because it is something that I’m getting started rolling out. It’s a work in process. I have a questionnaire that I have people fill out to get a background on them. It goes back to some things like you forget some of the simpler things because you do them. In the questionnaire, I didn’t put, “Do you have an LLC already?” The goal of that is to see where people are at. What I am finding is of the five people I’m speaking with, we all have this problem. We’re more ready than we think we are.
People who have been watching videos, listening to podcasts, and been involved 3 to 6 months, they’re more ready than they think they are. You’re never going to be fully ready. It’s the reality of you never going to feel comfortable buying your first note. There’s one guy, who’s been studying for 45 days. He’s an auditor. I stereotype an auditor as somebody who’s into the weeds, digging in, and be good at due diligence because of what they do. This guy created his due diligence template and stuff and I said, “Do you want to use mine?” He’s like, “No, I want to create my own so I understand the process and stuff.” It’s been going well from that perspective.
To piggyback on when are you ready, I agree. On the Facebook group, there was a question about forming an LLC and that thing. The thread evolved into, “You shouldn’t be using an LLC,” and all this stuff. I don’t want to rehash that but my point is you can always adjust. It’s not like you can’t go from an LLC to trust or you’ve changed how you set up some of your entities. I want to reiterate none of us are fully ready.
I went from an LLC, then a holding company with LLCs. Now I’m an S corp and got other things. Somebody posted on BiggerPockets. They have two rentals cash flowing $500 a month. They spoke to this company called Anderson. It’s not Anderson Consulting, the big mega-firm, it’s another Anderson. They had a 30-minute consult with them. Because they have two rentals, they recommended that they should have four LLCs and two trusts to hold these rentals in, a living trust and S corp or C corp. They would do all of this for $14,000. People do that stuff, but the reality of it is you don’t need to do all that. With two rentals, you need to have an LLC.
It comes down to your risk tolerance.
If you have no assets and there’s nothing people can take, you don’t need an LLC. That was number one. I have three main ones. The second one is I want to start a membership website and also create a training program. I’ve been anti-training for years. Finally, enough had people poke me in the eye a little bit and say, “On this.” People say, “How do you do all this? Do you have the time and stuff?” I’ve been working on this stuff for six months and just planning ahead. In this same thing when I started my first fund, I had started five months prior to my attorney getting stuff ready. When I hit the go button, I was ready to go.
You mentioned 2019 was more profitable than you expected. That’s largely because, in 2018, you were setting up that first fund. Is that right?
Yeah. At the end of 2018, I started the process, and then 2019 is when we got it rolling. That was in the Q1. I didn’t do it until Q3, to give people an idea. This one is interesting because I went round and roundabout, do I take a group off of Facebook? Do I go to the mighty networks or some of these other groups? I’ve got several consultants that I’ve been working with over this time. Essentially Facebook is going to stay. The Notes and Bolts aren’t going anywhere from that perspective. The membership site is going to be in several steps.
It’s going to be paid. There will be different levels, but on the top level, I’m going to open up the vault of all the files I have for templates and stuff. The other thing that I’m going to be providing is people are going to have access to my calculator. I measured every calculator. I’ve spoken with a company that it’s going to be licensed so I can license the calculator. People can’t take it, download and be like, “I signed up for a month and I got your calculator. Screw you.” I know it doesn’t work that way. I would click a little button and it wipes off your computer. It runs through an executable file. It wasn’t cheap to get that process.
I’m not doing a membership site as a profit center. To create this site, it’s costing me over $10,000, to giving people an idea. The way I want to manage this and organize it, I got a lot of ideas and I’m with people who are helping me build and grow this, it is going to help me develop and grow my business as well as everyone’s around. It goes back to co-elevation. If we can raise everybody up, it’s going to be helpful for everyone. It we get people to be subject matter experts in different areas, that would be helpful. The training component is going to be something that is a completely different level. It’s going to be video-based for topics. At the end of that topic, it’s a live session of Q&A. I want to make sure you’re ready to go onto the next level.
It’s not a spend a weekend watching videos. It’s going to watch a video a day. It’s going to be 15, 20 minutes, not three hours because your brain can handle three hours of information. You do things in small snippets. It is going to be extended over a longer period of time because of all the content that I’m going to be throwing at people. It’s something that would be beneficial and it’s not going to be $50,000 either. People who take my training get rolled right into the mentoring program. You’re not taking my training unless you’re buying a note. That’s the interesting thing as well. There will be a cost to it but I’m telling people, you have to have this much money because you’re buying a note. I’m going to have the whip and we’re going to go through this. I’m not having somebody spend his money, go through this thing, and not do anything with it. Unless you’re like, “This isn’t for me.”Nothing in life is handed to you. You're going to work hard for it. Click To Tweet
To be clear, these are notes that you’re not going to have a trading desk.
I’ve told people with my mentoring, “Can I buy a note for me?” Nope. “Why not?” I’m like, “Let me explain this to you. Whether it’s my money or in a fund, my number one priority is to sell at the highest price. I’m responsible for my investors. How can I sell at a higher price and then in the same token, tell you that you need to buy for the best number that meets your needs?” It’s a complete conflict of interest. If there’s an asset on Paperstac that I have listed and somebody wants to put an offer on it and so forth, all the power to them. Typically, I’m going to shy away from people like, “No, you’re buying from somebody else.” If there’s a pool of assets that comes in the door and stuff, that’s even a gray area because I know people that do that. What they do is they hand the junk assets to some of the people that are with them. I’m not getting involved in that rat race.
As far as your new programs that you’ve already started and that are coming out, you’ll have the mentoring and then the community, and then the third is the asset management.
That’s another one and I have notes I’m managing for people now. The best way to explain this a little bit is that people know somebody who also does this. We’re not in competition, in the sense, but Bill McCafferty. Bill does it on seconds and he manages assets for people. I’m going to do the same on first. I have some now that I’m working with people who maybe got into a bad JV deal. You’re not happy with the person. Instead of them giving you money, you want to take the asset back. You were passive in the sense that you get that back and then I manage it to you. I do not own it. It doesn’t go into my name. Think of me as an attorney or any other consultant you hired to do something. I’m there to manage that asset for you.
Is that a monthly fee?
Yeah. The goals that I’ve been talking about are more industry things of my bigger picture that I’ve had. The third is my portfolio and my personal growth, I want to raise $5 million in 2021 or a liquidity fund or some fund. In 2020, I’ve probably raised $2.5 million. I haven’t seen the final numbers yet, they almost double. In 2019, I was at $1.5 million, $1.8 million. In 2020, it’s $2 million to $2.5 million, which is 10%, 15% growth. My target is $5 million. If I hit $2 million that’s still rock-solid from that perspective but my goal is $5 million. I’m talking about it being an accredited fund for accredited investors.
I’ve had the attorney working on these details for a month. He’s at the point of, “Tell me when you’re ready, we hit the go button.” These aren’t the things that I wake up in the middle of 2021 on and it would be like, “This is what I want to do.” From that perspective that’s another major milestone that I have. One thing I’ll mention is to get to that point. I used to do JV deals. My JV deals now, I’m down to a handful. Those are with people who have been with me from the beginning. We’re in assets that are going well. I don’t want to upset the apple cart in that sense. That’s one of the things that I’ve been poking you about a little bit. It’s some of these JVs. I’m trying to wrap them into a potential fund and giving you ideas on how to structure it that is a win-win for everybody. I’ve been doing all the talks. I’m curious for your feedback. What are your thoughts on my goals?
They’re aggressive but I wouldn’t ever count against you. I’m sure you’ll have more sub-goals and details as far as how to reach those bigger goals but I like that there are three. They’re straightforward and measurable.
They’re realistic. They’re timed. I go with the smart method and I work off that one-page business plan. You start with high goals and you break it down into little pieces. That’s how you get there.
I did your one-page strategic plan in 2019. What book is that from?
Gino Wickman’s Traction. In one of my prior companies, this is what they used. This was a $300 million company. It was like, “We don’t need a 100-page business plan that nobody’s going to read. They did this, they stuck it up on the conference room wall where everyone could see it. Every quarter, they’d go through and see where are they targeting. This was in home sales. They are developers. The interesting thing was individual bonuses were based on achieving these goals. Every quarter, you’d see where you fell because 50% of your bonus was your performance, 50% was based on the company bonus. You could almost see where things fall into action. Those immediate priorities you’d have, “Which ones are mine? I want to make sure I get these done because they relate to others.” I have other goals as well but I’m keeping no secret.
I’m not surprised. I’ll be honest, I’ve set goals but this will be good for me to get ready. I’m somebody who I don’t like to say I’m going to do something and not do it, which is great. I like to think I’m going to follow through and finishing things. The downside with that is you tend to be maybe more noncommittal. I don’t want to tell you what I’m going to do because it gives me a way out. I don’t want to let myself off the hook either. I’m excited to take this and come up with some solid goals.
Think of it this way. You’re a football guy as well. Every quarterback who goes into the game wants a 100% completion rate. The average is 65% is considered good. Baseball, you’re successful 30% of the time. I look at it more like football. If I put together ten goals, if I hit 6 or 7 of them, that’s a great year. If you don’t put anything down on paper or anything scheduled, and this is where a lot of investors get lost, you fall into that abyss. Where the hell did 2020 go? Everybody’s saying that now. I can tell you month-by-month where it went because every month, I had goals and what I was doing every month. When you do that, it’s not a secret sauce. It’s a matter of you see something that’s like anything. We all know holidays are coming and people celebrate Christmas. It’s coming so I got to get my tree up. I got to get it decorated. A goal, as simple as it may be, is a time goal and could be a business like that.
In the military, it’s called reverse planning. You set a date that you have to have this accomplished by and then you go backward. You then have your little sub-goals along the way and you reverse engineer. There is a ton of importance and value in planning and habits. James Clears’ Atomic Habits is a good book. I need to reread that. He doesn’t bash goals but he talks a lot about how to get there. For 30, 40-minute podcasts, we need to gloss over the how in some ways, but if you don’t know where you’re going, there’s no point in even coming up with the how.
You can relate to this. I had a project back in the day. We were dealing with the United States Army Legal Services Department, which was 12 or 13 branches of all the attorneys in the Army. We had to design and build their headquarters and courtroom in twelve months. Jamie’s worked with the government. To get anything done in twelve months is miraculous. They had two Colonels. They’re both Colonel Martin. We call them the Martin twins. They were not brothers or anything. They just had the same last name.
These guys were awesome because they still speak with one to this day many years later. They knew how it was that we did with the whole construction team. We brought everyone together. When you talk about scheduling, there’s what they called SIPS which stands for Short Interval Production Schedule. Years ago, we took Post-it notes in different colors and each person had a different color. You’d go up on the board in the reverse schedule, “Here’s what we need to finish something. How much time do you need?” The guy said, “I need three days to finish this.” You worked your way backward and each person would write how many days they needed and put it on the board to get to that point.
You can look at that in note investing as simple as, how much time do you need for due diligence? You can say, “I need three weeks.” The title report is going to take five days to get. I need to send it to my attorney who’s going to take three business days because attorneys are not going to look at it overnight. I need two days to review the loan sale agreement. Maybe you get that in advance. “Can you send me in advance so it doesn’t cause two days of a delay?” You need to get the collateral, which starts that clock. You map that out and say, “I can close.” When someone asks, “How can you close?” “I can close in 10 to 15 days,” because you know that exact process where you’ve mapped it out. It’s simple. When some people say, “You can close in three days,” I laugh and said, “It can’t happen unless you have a title report that you’re going to guarantee now.” I found two counties that had to get title reports to close so I came and get them.
The abstracters have to physically go there. A lot of note investors and business owners, in general, get caught up in being reactive. You have to be reactive. You can’t predict everything, but if you’re proactive as well, you can stay ahead of the game. That’s what’s you’re getting at.
One thing I want to mention too when we talk about my goals is I start the framework of my 2021 goal in the middle of 2020. It’s not something that I do in December. December is when I finalize them.Note investing is as simple as how much time do you need for due diligence. Click To Tweet
Is this written as you start or is it more thinking about it?
I start to think about it but I usually write it down in notebooks. My wife got me this device called the reMarkable 2. This thing is awesome. I highly recommend it. It’s a digital notepad that feels like you’re writing on paper. That’s all it does. It’s not like you watch videos and stuff. You can read books on it as well. It’s $300 or $290 or whatever. I have this handy. I have a folder that’s called Brain Dump. I write stuff down and eventually do something with it. These ideas start back, but not all of them. Some of them pop up out of my head at some random point in time. For those who know me, that happens a lot.
This stuff isn’t like in December, “What do I want to do next year?” I’m starting looking a year ahead of, “Where do I want to take my business and what am I going to need to do? What are the things I need?” People are like, “How do you do it all by yourself?” I don’t. I have two consultants helping me with the membership, the training, and my new website. It’s three now. I have a VA helping me with due diligence, so posting my due diligence template. I give them a skip trace and data tree reports. They take all that information, put it on here, and put everything together. They create a nice package for me, send it along, and then I’ll go through the service and comments.
The pictures are already uploaded there. The property inspection reports, the property details, the loan, the loan amount, last pay date. I’m going to sift through all that information and they write it down. They’re learning the chain of assignments so they can write down the assignments, and then separating the files. When you get a collateral file emailed to you, it’s usually one big file with 80 sheets or 500 sheets that are dumped. I have them breaking that apart. I’ve taught them that because now it comes into my folder like an assignment from Wells to Bank One, Bank One to PFC, PFC to USMR. The files are named there. I’ll still go look and check to make sure I like the power of attorneys and all that stuff. I still do the normal due diligence but not one big cluttered file. That’s how I operate so I can do stuff like doing due diligence on 60 assets that I’m closing.
That blew my wife’s mind when I told her that.
Does Emily want to help me?
I’ll talk to her.
I got to speak with Emily. That’s my goal number four. We are going to get Emily on the show.
I think you can raise $20 million before you can call her.
Everyone out there reading, if we have to peer pressure her, what do we have to do? We’re going to get her on. It’s funny because you mentioned how everyone’s timid to come on camera. Usually, you can sense that from people. They get a little nervous. Even when I did my first show, you did yours but I spoke to her. She’s like, “Cool, whatever.” I’m like, “She’s better than you.”
My one sister said, “Emily would be more entertaining than you are.”
It’s probably the brains behind it too.
Those are good goals. All four of them. I’m excited to see where it goes.
Are you ready for your goals?
I’ve got a few days.
You’ve got a few days to fast track that. I’m curious for people on the Facebook group or elsewhere, what were your goals are? That’s one thing that maybe we’ll put a poll in or something on the Facebook group. I’m curious to hear what other people’s goals are. My goal, the way my theme is for 2020 is to try and help everyone hit their goals, try and help as many people in this business that we can help. My time is limited from that perspective because of everything I’m going on. By putting some of this stuff together and streamlining a lot of things I want to do, I’m hoping that we can help a lot of people. The reality of it is that the individual also has the initiative and drive to do it. Nothing in life is handed to you. You’re going to work hard for it.
You need people’s input in order to help yourself, co-elevate everybody.
They got to be able to take a little bit of comment or constructive feedback. When I give people feedback, it’s not meant to take a jab at them. It’s meant to help them. It gets your brain thinking and spinning in certain areas. We’ve run to see this in the past. Don’t ask a question, “Where should I buy notes?” Who knows? Where are you? How much money? What’s your risk level? What’s your tolerance? I mentioned this in a prior episode, start with a bigger question, “I’m from this, I’m thinking I’ve got this much money. I’ve studied a little bit about the State of Tennessee. It looks like it’s non-judicial. People had experience in that state.” You asked that question and people are like, “This guy has done his research.” It’s an impressive question compared to some of the stuff we see. Jamie, what’s your Note and Bolt?
My Note and Bolt doesn’t only apply to note investing but it is consistent beats intensity in the long-term. That’s a quote from Bruce Lee but who knows if that’s true or not. The point is showing up every day, almost every day, every week or whatever it is, to me in the long-term is much more valuable and much more productive than crushing it for an hour a day or a week or something. There are all analogies we could make as far as one would be working out. You’ve got to work out 5 or 6 days a week if you want to see results. It’s not just showing up or do a crazy CrossFit workout for two hours, and then not do anything for a month. That’s my Note and Bolt is be consistent with how you do things. You can certainly dial up the intensity. I’m not suggesting you’d never be intense about things but in the long-term consistency is much more valuable.
My wife for our anniversary got me a subscription to Mindvalley. For the people who don’t know Mindvalley, the guy who runs it made a challenge to Harvard University. He bet them $1 million. He has a webinar about it, where four people would apply to Harvard and get in, and then he picks four kids who don’t go to college. Over four years, they go through his program versus going to Harvard. Two years later, they’ll see who are more successful. He believes that his people will be more successful. He believes the mindset of having the goal to go to Harvard is as equal to getting in, for people who have that mindset of, “I want to go to Harvard.” What it’s about is people don’t know. It’s almost like business coaching, but for many different people in different industries, it’s $600 a year. It’s a lot cheaper than a business coach. It’s funny you mentioned intensity because one of the courses I’m taking now is the habit of voracity and being ferocious. The whole thesis behind it is it’s the ability to rise instinctively to any challenge. If you’re going to do something, do it at peak performance. Don’t do something half-ass essentially.
It’s a habit so you’re doing it consistently.
I’m taking one called Genius Hero Legend. It takes 66 days to create a habit. That’s what they have you do going through this. There was a good one on networking, which I start doing some short videos on the process. I’ve taken two networking-raising money courses through them and The Family Office Club. They all have similar goal plans, which I did some videos for people and talk about it. That’s some of the stuff in the membership group as well that rolls further into that. My Note and Bolt, here’s my quiz question to you, Jamie. My borrower who hadn’t paid in thirteen years signs and mod sends me a check for $1,000. That is his deposit. What do I do with that check?It is natural to feel uncomfortable when buying your first note. Click To Tweet
Send it to the servicer.
That’s correct. It’s a down payment or a modification. It’s not principal or interest, just income. I asked the servicer why should I send it to them? It’s a bigger question.
I’m assuming for tax reporting purposes.
That’s it. They said, “We can acknowledge that he made the payment, so we can report it to him as well to you for tax purposes.” It’s another record by a third-party that was me.
It wouldn’t be part of his credit report. Some of the servicers report to the credit agencies as well.
Madison is the only one.
You’re right. They’re the only ones that I know of.
I don’t think FCI, Allied, SN and Land Home do. I’m sure Superior doesn’t.
I’m sure Lake City doesn’t.
It’s one of the things when you originate a loan as well. That’s the thing I’m thinking if I originate a new loan or convert a CFD or anything that has a down payment, it’s probably best to have it go through the servicer.
Before our conversions, we haven’t been charging borrowers. We’ve been trying to keep it as streamlined as possible. Some of these cost $500, $600 just to do the recording. I have started to at least consider charging something.
I will find out what it is. I typically offer them the recording. It depends on the cost. If they want title insurance, they can pay for it.
You’ll have them pay for the recording?
Yes. They would have had to anyway if they paid it off. I’ve got this asset that I talked about that’s supposed to close. This is one in Maryland, which we’ll have a nice return. Unfortunately, the borrowers inherited the house and refinanced it many years ago. When they refinance it, they couldn’t afford honestly the payments at that point in time. They’ve had life circumstances.
You’ve owned this asset for a while?
I’ve had this asset for two years. Life happens and they have a lot of issues. We were supposed to foreclose months ago. They listed it to try and sell it. The listing agent was buying it. They had an agreement to buy it if nobody made an offer above a certain price. They promised they would close the day before the foreclosure sale. They said, “We need an extra day for title. We canceled the foreclosure sale.” We had them put in $1,000. In hindsight being 2020, it should have been $10,000. I had them put that down and this was back in October.
We’re in December and after a week, I told our favorite attorney to reschedule it. The sale now is the eighth. The woman who’s buying it texted me saying, “We’re going to close before Thanksgiving.” She texted me and said they’re closing this past Monday, then texted me saying they’re closing on Wednesday. On Wednesday, I get a message saying that the hard money lender on the deal wants the title agency to a property survey. I’m like, “They’re not getting this in a day.” Allegedly, it’s supposed to close. I’m either going to have to close on this, sold it, or who the hell knows what happens. The borrowers filed for bankruptcy several times. Who knows what can happen? I know one thing, I’m not canceling the foreclosure again.
Not at this point. Do you think it was coordinated to delay? Do you think these were legitimate reasons?
I’ll talk about that after because there’s some information we found that had nothing to do with the borrower. It was between the buyer and the title agent.
It wouldn’t cancel that foreclosure either.
I should text them and be like, “Are you closing?” One last Note and Bolt and I apologize for dragging this on. I got two contracts. One from an REO management company and one from a preservation company. People, a lot of times are like your Apple subscriptions. You click on it and sign whatever they say because there’s no ifs or buts. Both of these agreements have language in there that essentially said, “We could murder the borrowers, burn the house down and blow up the city and we’re not responsible. You would be.” That’s in an exaggerating word. They had no indemnification of me and they had no liability. They wiped themselves of 100% liabilities on anything that was to occur.
You think a preservation company goes out there, they forget to winterize a property. The creek floods, “Sorry, not our problem.” Whenever you get a contract from people, and we’ve mentioned this in Note and Bolt many times, spend $200 to have your attorney review it. I told both of them, “I’m not signing this. I’m going to have my attorney review it.” One of them comes back and says, “If you have an agreement you want, just send it to us.” One more, I resolve that issue I had with the company that had made a mistake on a certain type of report. That is resolved and done. Is it a win-win? Nope. Is it better than I anticipated? Yes. Is it a lot less than I anticipated or wanted? Yes. At the end of the day, it’s one less headache I got to deal with and life goes on.
The last time, you had me on the couch like a therapy session. I did a lot of talking last time. Everybody, thanks for joining us. This has been fun. We have a lot of good guests coming up, so stay tuned. Be sure to give us only positive reviews on all the other places that you can do that. Go out and do some good deeds. Take care.
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