Many of us go into real estate passively investing. Doing it on the side, we make investments and have it all handled and taken care of. However, things tend to become interesting, and we decide to dive deeper and eventually move into the active side. Vince Karlen, real estate investor and founder of BreezeBlock Capital LLC, is well familiar with this story. In this episode, he joins Jamie Bateman to share with us his background and what made him move from passive to active. He also talks about fix-n-flip notes versus owner-occupied notes and the pros and cons of short-term rehab loans. Taking us to how he is now, he shares his Baltimore portfolio, how he is making the most of 2020, and what he is looking forward to in the future. Stay tuned into this conversation and learn a thing or two or more about taking your real estate investing from the sidelines to the front line. 

—

Listen to the podcast here:

From Passive To Active Investing With Vince Karlen 

I’m here with a special guest Vince Karlen. Vince is out in Seattle. We are going to dig into his background and his story with note investing. We will see where it takes us. Vince, how are you doing? 

So far, so good, Jamie, yourself? 

I’m doing pretty well. 

I have to say there’s a little backstory for the readers. I woke up to a text from you asking me if you wanted to do the show. I hadn’t even had my cup of coffee yet. I wasn’t expecting this but a pleasure to be here. I have been a long-time reader of the show, dating way back to before your time when Gail was still involved. I learned a lot along the way, thrilled to be able to be part of it. 

Thanks for joining us. Chris and Gail did a phenomenal job of getting this thing rolling. I don’t know if you have read the episodes with Steven Burke. The first one we did with him, we gave him five minutes’ notice. You don’t have any excuse. Vince, you and I have been in touch off and on for probably a couple of years now. I know a little more about your background than some people may. If you don’t mind, could you dive into your background for us? 

I will pick up where the story starts as it eventually relates to real estate. I was in school getting my Master’s. By fate, I fell into a small amount of money as a result of a death in the family. I didn’t know what to do with it. It was up to me to do what I wanted. I didn’t have a ton of time to think about it because I was in school but I had this clever idea. My idea was to try to become a salaried student, which I thought was very clever. I looked around at the landscape at that time. This was post subprime crisis. 

In the fixed-year yield world, interest rates were very low. It was very difficult to earn a decent return. However, at that time, peer-to-peer lending started to come into existence. For those people who might be familiar, early adopters in the space where Lendingclub and Prosper. I have heard those names and I was intrigued. I knew it was a way to earn some yield so I started to dabble in that. I became interested and started to spend more time learning about what it was about. In that context, I discovered the debt vertical, what it means to invest in debt. Early on, that was consumer debt, not real estate debt but as time went on, there were other debt asset classes that you could invest in this online peer-to-peer crowdfunding or crowdsourcing space. 

Eventually, real estate became one of those verticals as well, particularly on the shorter duration fix and flip of that side. As I discovered that, I immediately realized it was a superior risk-reward proposition relative to the other options out there. There was consumer debt. For a while there, you could invest in small business loans. There was even some stuff that was a little bit more exotic like receivables, debt and so forth. Real estate was very attractive to me because it was a relatively straightforward proposition. You had pretty respectable returns that were secured by real estate. I started to gravitate in that direction. I spend a lot of time on it as time went on because I became interested in the point. It was a part-time job. 

I realized that the stated benefit is you can have exposure to this asset class passively. In the sense that someone else will originate the loans, underwrite the loans and will service the loans. All you need to do is, with a few clicks, take a look at a couple of details, make an investment, you are done and you don’t have to worry about it. If the loans go bad and go to foreclosure, it’s all handled. It’s very passive. I realized as I started to become more interested and do my own underwriting, I was becoming an active-passive investor if you will. It occurred to me, at some point, that maybe I want to continue to evolve in that direction and become more active myself, especially as I became more comfortable with space and I started to see how it works, some of these loans started to pay off and I saw the full cycle. 

As far as a little bit more of your background, I see what you are saying about the benefits of lending and note investing. This is a show for people that are familiar with note investing but what led you to that asset class besides the passive nature and the potential safety compared to other asset classes? Did you have a background in anything that was real estate-related? 

I had some tangential experience in the sense that my parents had a rental property here and there. We have been homeowners in the family. I had a little bit of exposure in that way but it was certainly not my professional aspiration growing up. In that sense, I fell into it. I was looking for cashflow. As I mentioned, I’m looking for yield. One thing led to another and that’s where it started. 

You invested across several of these different online platforms. 

That’s how I started. I thought it was a good way to start both passively and safely. These were all first positions and you could see what LTV you were coming in that. You had some control over your relative level of risk. 

Did you find that it was passive and safe? 

If I were to do that type of investing to a large degree, I would do it slightly differently than at that time where I would look for different things but the most part, yes. I haven’t gotten mega-rich and I also never had any major losses as long as you are diversified. I will say for people who are interested in doing this, make sure that you spread across many different investments. That’s one of the attractive propositions about these platforms. A lot of times, they still take a big loan and they will splice it up. You can take a little piece then you can take a little piece of another one and so on, you can get pretty diversified. In that way, the odds that you will lose all your money are very small. 

I have done some of that myself. Some of those platforms and investments are strictly for accredited investors. Others are not but that is one of the benefits or at least should be as far as spreading your risk across and getting in at a lower entry point dollar-wise on a particular deal. Over the last couple of years, you have transitioned a little more from passive to active. Can you talk about that a bit? 

I’m a relatively young guy. I figured out what I was doing, saw how it worked and learned what there was to learn. I was pleased with the results but I realized that I could potentially do more. I was able to achieve a certain degree of confidence that I understood the language, how things work, how these assets are written and how they are managed. I thought over time, I would like to pursue a more hands-on approach, which would require more work but also potentially more reward. I have had these thoughts in my mind and it was around that time that COVID-19 hit. I’m European and I have a lot of friends in Europe. If you will remember, outside of China, Europe was the first to go into lockdown. 

Active Investing: You can take a little piece, then you can take a little piece of another one and so on, so you can get pretty diversified. In that way, the odds that you will lose all your money are very small.

I realized pretty early on that we were probably going to have to hunker down for a while. I didn’t know what it would mean for real estate. I certainly did not expect that real estate would explode the way that it has since then but I knew that there would be some downtime. I thought this is a great opportunity to take some of this downtime and start to try to set up the infrastructure to transition a little bit more from passive to active. It was in that context that created BreezeBlock Capital, which is the LLC that I manage. 

One of the reasons I wanted to bring you on was, in speaking with you in 2020 through the pandemic and everything, I was impressed with the fact that you did take the bull by the horns. Chris and I have dealt with talking about the pandemic, ensuing shutdowns and the economic struggles that people have had. We don’t want to celebrate the pain that people have gone through because it’s very real. At the same time, I did look around. It was easy to see that the difference between some people who took that situation and either became the victim, went down that path a little too far mentally, wasted the time watching Netflix or whatever else. 

Others took the time to roll up their sleeves and make something out of it. That’s one thing that I noticed with you in 2020. I didn’t know how much of it was circumstantial or what contributed to it, whether it was the timing of things in your own life. I noticed that you were somebody who took that downtime to better yourself, focus on your business and become a more active investor. I thought that was awesome. In a lot of ways, the moratoria have negatively affected the note business as far as slowing things down. It has been more challenging to exit deals but on the flip side, like you, I had a lot more downtime. I put a lot more time into my business than I would have been able to otherwise so there’s always a bright side and an opportunity behind every problem. I want you to talk about between March 2020 to now, we are in June of 2021, compare and contrast the differences there. 

Even though I was evolving into a more active role, I wanted to stay with what I knew, which was this fix and flip short-term debt space. I know it’s a little bit different than what you and Chris generally operate in and probably with a lot of the readers. The space that they playing is tangential but not the same. I knew I wanted to stay in this space. It was a matter of figuring out what was happening behind the scenes when these other platforms were doing all of this. What is it that they were doing? What infrastructure did they have? What people did they need? 

I knew the answers to a lot of those questions already, in part because of your show, we deal with a lot of the same things like servicing loans, foreclosing, workouts, etc. You have to figure out where can I buy notes. Once I have them, “How can I manage them? Who’s going to help me on the legal side? What type of geography is it? What type of paper do I want to target?” That was kind of what I said about doing and then continuing to do. It’s an evolving process as you know. 

We never have it fully figured out. In March 2020, had you bought any notes yourself besides through the passive online platforms? 

Before COVID-19, I had bought a note here and there from local hard money originators who would originate the note, and then they didn’t have a lot of their own capital so typically, they would have their small pool of investors that they would then sell these notes to and then they would service them. I had bought a couple of whole loans not small slivers as you typically buy online. I had a little bit of exposure in that sense as well. 

Is that mostly word of mouth? How did you find notes like that? 

While I was doing this online, I discovered that all of these private fix and flip, what we call hard money lenders that’s a very fragmented industry, a lot of times are local outfits that lend locally and also their capital sources are local. When I realized this, I looked around where I was living to see who these players were and then introduced myself. I was able to do a little bit of buying from there. 

Were these performing or non-performing loans? 

Performing. They were generally loans that were originated and immediately then sold off. 

They make their money on the points on the front end, correct to sell the loan off and put their money back to work on another loan. 

Generally, originators of fix and flip loans, if they keep the loan, will make the interest. For them, if they are trying to achieve scale, a lot of times, they will run out of money very quickly so they try to sell off the loans, and then they make money on the front end on the points when they originate. 

What discounts can you get on a deal like that? As you said, a lot of our readers aren’t familiar with this type of loan in particular? 

This is different between owner-occupied and fix and flip. It always depends on the specific piece of paper and also on market conditions. There have been some fluctuations and how desperately the lender wants to recapitalize but generally speaking, you pay par or close to par. Rates are a little bit higher than your typical owner-occupied rates. Rates have come down because the investors have discovered the space. A lot of capital including institutional capital has started to come in and that’s depressing rates. If you know where to look and how to look, you can get rates in the low double digits, 10%, 11% or 12%, paying par. 

I went on a little bit of a tangent there. Where are you now compared to 2020? 

I’m in the same situation, just further along in the sense that a lot of the systems are in place. Some of the buyer channels have been established. We have a small portfolio. We are, at the moment, pretty close to fully deployed. I have reached the point as I continue to think about evolution. I started to feel comfortable about potentially pursuing distressed debt with the idea that we may come into tangible also possession of tangible assets, not just paper but actual property. As I step back and look at the evolution of the company and myself over the long-term, my ultimate end goal is to have experience and exposure to a lot of different verticals within the real estate world. 

I see note investing as a great place to start because it is a very conservative, safe place to get your bearings. If you start to pursue it more actively, you can segue into other niches of real estate, whether that is coming into REOs, and then figuring out how to manage those from there and so forth but that’s the long-term trajectory. Where we are now, we are comfortable with the portfolio we have. We try to continue to grow that at a small but steady pace but with the understanding that we are ready to adopt potentially a little bit more risk and move into, not just performing loans but non-performing loans knowing that some of those will default and will result in REOs. 

Are you thinking about moving into more non-performers? 

We did bid on our first tape of non-performing loans, which to my surprise, we’ve got. We are now going through the process of working those and most of those will be REOs. That will expose us to the next iteration of the evolution as far as how to manage them, what to do. From there, you have to increase your team as well. Now, we are dealing more with realtors, potentially contractors or property managers, and the relationships that you don’t necessarily need to have if you are dealing in the performing note space. 

When you are comparing 1st and 2nd, the first is a little bit closer to the property unit on the owner-occupied side but for fix and flips, it has a higher chance of getting that property back if you are talking about non-performing fix and flip notes. All of this, it depends. I’m working with a guy who says he’s going to get me a T-shirt that says, “Labrador Lending,” it depends. There are so many variables and it’s hard to make. 

That is what’s fascinating about it. That’s what excites me about it. 

What about that excites you? 

After a while, you can recognize characteristics of loans, try to guess, which way they will play out and with some degree of confidence, you will be right. No two loans are the same. It’s fun, to me at least, to try to figure out, “What’s the story behind this loan? What’s going on? What could go wrong?” If it’s non-performing, “What happened? What does that mean for me as the note holder? What does that mean for my prospects of recovery? Who might I need to involve in this process?” For instance, when you communicate with a borrower, you are trying to figure out what their story is. Are they now non-performing for a legitimate reason? If something went wrong, that’s out of their control or the prospects are still good that they will execute on the project. Are they in and over their heads and we need to pursue a different path? I look at it as a puzzle. If you break it down to a loan-by-loan basis, each loan presents a little bit of a puzzle. It’s a lot of fun for me to try to figure that out. 

I have heard Kevin Shortle. I don’t know if you have listened to any of his stuff but he talks about that. Every loan breaks down to the numbers and the story, whether that’s again, fix and flip owner-occupied. That’s what creates a lot of the content for our shows. It’s these stories and they are fascinating, good, bad and ugly, they all can see. 

They can be very frustrating too. I don’t want to glamorize this. There are times, when you say, “I wish I would have stayed on the passive performing side and I could sit back and not have to deal with some of this stuff that you have to deal with.” 

I know that you do have a portfolio. You mentioned the tape you took down. We will have to bring you back to get some more insight and information about that. Is there anything else you want to talk about regarding that particular pool? 

We will save it for the next episode but I promise there will be a lot of Notes and Bolts in there. We talked about it but it might make a lot of sense to do a case study on one of these in particular. It has turned out to be pretty colorful, exciting and also hair-pulling. Certainly, a lot of lessons were learned. We are going through the middle of that now. Not quite sure if it’s going to turn out to be a success story, a disaster or something in between. I thought, perhaps we will wait until that runs its course, and then we can present the complete picture. 

Looking back on everything, as far as your passive investing, your transition to more active investing without getting into too many specifics on that case study or any others, what are some lessons learned or any pieces of wisdom you could provide to the newer note investor? Maybe you are thinking fix and flip versus owner-occupied, how do I structure my business or anything you want to speak about. 

It may be helpful to discuss because I know that most of your content deal is owner-occupied. What were originally conventional mortgages, which is tangential to but different from short-term fix and flip debt? Both have advantages and disadvantages. I’m happy to talk a little bit about what I see as the pros and cons on the fix and flip side. Two of the advantages are pretty clear to me. One is on the compliance and the legal side. These loans, if they are underwritten correctly and this is something that if you are interested in investing in fix and flip loans, you should be conscious of and look out for this. 

These loans are intended to be structured as commercial loans, not meaning that you are lending on commercial property but these are business loans. The borrower should be signing as part of their origination paperwork, signing a statement saying, “I recognize that this is a business loan. This is not an owner-occupied loan. I’m not planning on living on this property. If they do live in the property, they are violating the terms of their loan basically.” That relieves some of the compliance pressure that lenders have as far as Dodd-Frank regulations and so forth. I’m not a lawyer. This is not legal advice. There are still procedures and rules you need to follow. It’s a little bit less burdensome. 

I think also the paperwork is generally cleaner because these loans are short-term, which means they were originated recently. If you buy them from somebody who originated them, unless the person you are buying from doesn’t know what they are doing, the paperwork should be clean. You don’t have to worry about missing assignments or paperwork that gaps in the chain of the paperwork and you don’t have to track that down, etc. From a legal perspective, you are pretty ready to go. It’s a little bit cleaner. Also, one of the things that, particularly in the current environment, which suggests that we may be going into an inflationary situation, what’s nice about this paper being short-term is that it is short-term. 

If it turns out that at a 10% yield where that looks attractive, it looks like nothing ten years from now, that’s okay because your loan has rolled off. You can either reinvest at an adjusted higher interest rate. If it’s unattractive, you can move out of the asset class versus if you buy a 20-year loan that’s performing at a 10% rate. Now 10% looks good but ten years from now, 10% is peanuts. You can try to sell the loan, but then you are going to be selling at a discount because everyone knows that your 10% interest rate is not attractive anymore. We call that inflation risk or interest rate risk. On the short-term side, you are protected from that. 

We have been refinancing some rentals and our primary residence as well. It’s a great time to become a long-term borrower. It may not be a great time to be a long-term lender in that sense but that makes a lot of sense. I don’t know that that risk is quite as big of a deal if you are talking about non-performing in the non-performance space but it’s absolutely a consideration so that makes sense. Any other pros you can think of off the top of your head comparing it to? 

It depends on how active you want to be. If you are interested, one of the strategies or the ideas to pursue more non-performing debt on the fix and flip side is it might be a discounted way to come into the property. In the sense that the loan is in trouble, you are most likely going to have to foreclose. Maybe it sells at foreclosure auction but if it doesn’t, you now own this property in theory. Again, it depends on the quality of the loan and how much you paid for it but you might be able to come into hard assets for a better price than if you go out and try to buy it on the open market. That’s an advantage. Some people will see that as a disadvantage in the sense that you now own property. There are a heck a lot of more headaches and work associated with that. If you want to stay passive, hard money loans are probably not a good choice for you unless someone else is doing all the work. 

It depends on what you want to do but another thing I thought of is you are not kicking people out of their homes if you do end up having to foreclose, do a deed in lieu or some other exit through the property. Again, we have touched on it a little bit but you are not dealing with an owner-occupied property so there isn’t a quite the same human element that the borrower is an investor who was hoping to make a profit but they are not maybe emotionally attached to the property. They don’t live there. 

Active Investing: If you want to stay passive, hard money loans are probably not a good choice for you unless someone else is doing all the work.

They still have a roof over their head. It has happened before that a borrower took out a loan and they ended up living in it. It becomes a little bit more gray. You are kicking them out of their home but they said they weren’t going to be living in there. In general, our strategy is similar to yours in the sense that we are not out here. Some people will say loan-to-own and they make loans with the hopes that something will go wrong and that will take back the property. That’s not what we are trying to do. We try to work with our borrowers and to help them realize successful projects. We realize that things happen but you are right. It is a little easier to foreclose from a legal standpoint but also an ethical standpoint. 

We have hit on a few pros. Any major cons that come to mind? 

It’s more involved in the short duration of the paper is attractive in some ways, for instance, the interest rate risk we talked about but it’s more work. You can’t set it and forget it. If you have a loan and it pays off, sometimes these loans can be very short-term. Usually, they are set at twelve months but maybe you have a borrower who knows what he’s doing, executes on this project very quickly and you have your money back in six months. Now you are sitting on cash. Sitting on cash is the worst thing you can do. That eats into your returns. You have to figure out quickly, “How do I redeploy it?” You scramble a little bit or you don’t have good options at the moment. There’s more work and a little bit more pressure in that sense. 

With our portfolio, if we end up being 3 or 4 weeks behind where we should have been, the grand scheme of things is not that big of a deal but for you, that could be a 10% or 20% hit there. 

If you have a 12% loan that gets paid back in six months and then you can’t redeploy that cash for another six months, your 12% return is now 6%. That’s a big difference. I would say depending on the loans that you do, if there’s a big rehab component to it, things can get significantly more complicated. A lot of times, if you are a smart lender that tries to protect yourself, you do not give out the borrower all their money upfront. If they are doing a major rehab or renovation, you will do what we call draws. You will give them a little bit of money. 

They will do a little bit of work. Ideally, they will show you the work they did. You will verify it, then you will give them a little bit more money. In that way, the lender can protect themselves but it’s also much more involved because now you have to send somebody out there to see, “What work have they done?” If they didn’t do the work then you have to talk to them and say, “Why are you requesting this money?” You also have to look out sometimes contractors will play tricks. I have heard stories of a contractor that will put materials on a job site, take pictures, send it to the lender and say, “These are the materials I bought, reimburse me.” They will then take the materials off the job site and move them to another job site. It takes some experience and you have to be careful to know what to look for. It’s certainly a little more involved in that sense. 

Have you bought a loan where it was not all of the capital was allocated? 

Yes. 

That’s definitely something we don’t deal with on the owner-occupied side. Any other cons you can think of on the fix and flip side? 

You have perhaps a little bit more exposure to the real estate market at the moment. There were a lot of fix and flip lenders who have got into trouble quickly during the subprime crisis. Things were hot so they lent pretty close to the value of the property. The person who was working the property did so to sell immediately afterward by the time they are done. They realized they can’t sell it for the price they thought they could then it becomes a big problem. As a lender, you can be more or less conservative. It comes back to how much you lend relative to how much you think the property will be worth. When it’s done, how much it’s worth at the time that you start lending. 

That is a major difference as you are dealing with ARV and you are really not. There’s not only the market swings like you are talking about. There’s also the forced appreciation factor from the contractors and the flipper themselves. There are a couple of more variables there regarding the property values specifically. If I’m buying notes in Michigan that are $50,000 UPB or an owner-occupied property worth $120,000, I don’t care if the property is now worth $100,000 in 2022. It doesn’t affect me too much. There may be some thinner margins in that regard and some more variables at play so it’s harder to predict. I would think that the collateral value, which in some senses is even more important than the collateral value for an owner-occupied note investor. As we start to wrap up here, what are things looking like as far as your goals for the future for your business? 

I touched on it a little bit. We are looking to continue to do what we have been doing. Slowly grow our portfolio of fix and flip loans primarily on the performing side. We are primarily self-funded at the moment. Our growth is slow and steady. We are not looking to scale quickly. For some people, especially if they are dealing with lower denomination assets, which we aren’t necessary, it’s a volume game before you can start making some serious money. For us, the perspective is a little different. As I mentioned, we are slowly trying to explore beyond the note space even if that exploration is through the note space. For instance, we talked about coming into REOs by buying delinquent notes then getting exposure to what does that means if we start to have to rehab ourselves, become landlords to ourselves or whatever the case may be. 

I want to hit on that real quickly because we had Fuquan Bilal on our show and we had one of his mentors, Dave Van Horn on. I have touched on this before but what you are getting at is you are learning one asset class very well. I know you have been studying this particular asset class, even within this niche of note investing and hard money lending for several years now. It’s not like you did this for two months and now you are talking about becoming a fix and flipper yourself or something. You are spending the time to get good at one thing, but then you have that tool on your tool belt, you can pivot to another asset class, and add that weapon to your arsenal if you will so when things do change with the market conditions and things that we can’t control, you are more ready than the next guy to profit and do well. That’s awesome. 

That’s what is fun about real estate. A lot of these things are tangential to each other. It’s not like one day, you are with apples and the next day you are with oranges. It makes for a seamless and transition that you can go with it at the pace that makes sense for you. What’s great about real estate in general, I know you have talked about this before is there are so much out there. There are many different avenues, opportunities and risks but it’s a fascinating world. 

I was doing jiu-jitsu for a little while there before the pandemic and, now I don’t have a good excuse not to get back. They say in Brazilian jiu-jitsu when you are a White Belt, you are trying to survive. As you were talking about that, I was thinking of like when you become a Black Belt in jiu-jitsu, you are still learning, there are still things you don’t know and things you are not too good at. I’m not a Black Belt in jiu-jitsu for the record. When you say go at the pace, when you are rolling with someone in jiu-jitsu, you can go with whatever the pace they want to go for and use whatever. You have many different tools in your arsenal. 

It makes perfect sense. It’s a process. We are learning the whole time. I love that. I agree with you. We have done more of the long-term buy-and-hold and rehabs. Our buy and holds are still a large part of our portfolio and now we are in the note space. The advice I like to give people is don’t try to do everything all at once. Learn it well. Take your time. It sounds like that’s what you are doing. You are not trying to scale overnight. Briefly, before we get out of here, what does your actual business look like? Do you have a virtual assistant or any systems you have in place? How does that work? 

I’m glad you mentioned this because I know she will certainly appreciate it. I know she will read at some point. I do have an assistant that works for us part-time, Cara, who has been fabulous. She has helped a lot. She doesn’t have a lot of experience in real estate but is very eager to learn. Sometimes, that’s almost been helpful to someone that has a total outsider’s perspective. Beyond that, it’s all third-party contractors but attorneys that we trust vendor, servicers, etc. Interestingly enough and I had this conversation with someone a little while ago who asked me where do we invest as far as geography is and so forth. A lot of times, the answer comes down to where do we have a good team? We are a small shop. There are a lot of behemoths in this industry. As a small shop, you don’t always get the service that you might necessarily want from an attorney, a servicer, a title or from whatever. If you can find geographic locations where you do have that infrastructure, it becomes a more attractive place to do business frankly. That is how we choose some of our geographies. It’s where we have those relationships. 

It’s true for the owner-occupied space as well. I do think the legal aspect is maybe a little more critical on the owner-occupied side of things as far as every state is very different with regards to foreclosure, Eviction Laws, timelines and costs. In that regard, it’s a little less important, which state you are investing in from your standpoint, I would guess but absolutely play to your strengths. If you have boots on the ground in a particular state, buy assets there and it makes total sense. As we wrap up, do you have a Note and Bolt for our readers? 

Active Investing: What’s great about real estate, in general, is there’s so much out there. There are so many different avenues, opportunities, and risks. It’s a fascinating world.

I segue nicely from the point that we made. One thing that I have learned regardless if you are very passive, active or somewhere in between, you are dependent upon other people to be successful, whether it’s a crowdfunding platform or you are doing it all yourself, but then you still need your realtors and your attorneys. With the idea that you need to be dependent upon people, of course finding good people is a huge challenge. That comes as a surprise to no one. If you do find good people, treat them well. That’s not the Note and Bolt. The Note and Bolt are, if you have good people, that doesn’t mean you shouldn’t look for more good people who do the same thing as a backup. 

I will bring this up because we will talk about this in the next episode. We have been doing some work in Baltimore and we have a good team and great attorney. I will throw the name out there because I know he has been mentioned on the show before, Brian Gallagher. We have good contractors. You never know. You might have a great attorney but maybe one day he quits, he gets sick, he moves or whatever and you don’t want to get caught with not knowing what to do. If you have a team, it doesn’t mean you shouldn’t continue to try to recruit. I almost call it like a second team or backup options. 

This is something we have done as I have split work. I have had somebody that we work with and they have had a great relationship with and I will even tell them, “I’ve got this going on but I’m going to give this other piece of work too.” In theory, your competitor but if you are upfront and honest, they understand that. That’s not a problem. In that way, if somebody falls out or something happens, you are not left scrambling. It’s hard to do because good people are hard to find. Finding a good person and then a secondary good person is even harder but you shouldn’t try. That’s something that’s already helped us quite a bit. 

To be clear, this is the only note investing show you should listen to. You should never have it back up. 

By attrition, there are some other ones out there but they come and go. You guys are in here for the long go. 

I made that mistake, to be honest, not on the show but with one servicer in particular, who I no longer use. I start dealing with only one person. It’s Monday and all of a sudden, “That person’s last day was Friday.” Now I need to build rapport with someone else. Easier said than done for sure because you’ve got 27 other things you’ve got to do at the moment as opposed to recruiting your practice squad if you will. You make a lot of sense. 

The better they are, the harder you fall if they, all of a sudden, are no longer available to you. 

I know we went a little bit long here. I do appreciate you joining us, Vince, with such short notice. We need to have you back on. We will have you back on in a few months or when things wrap up with some of the Baltimore portfolios that you mentioned. If people want to reach out to you, how can they do that? 

If you are looking online, this wasn’t intentional but it appears that my email address is right next to my name. For those of you that are not looking, you can reach me at, MVKarlen@BreezeBlockCapital.com. That’s the easiest way. If people want to reach out for any reason whatsoever, feel free. I’m always happy to chat. 

This has been great, Vince. I know our audience is going to get a ton of value out of it. I appreciate it. Thanks a lot. 

My pleasure, Jamie. 

Important links:

• Vince Karlen 
• Steven Burke – Past Episode 
• MVKarlen@BreezeBlockCapital.com 
• Fuquan Bilal – Past Episode 
• Dave Van Horn– Past Episode 

About Vince Karlen

Born in Zürich, bred in the United States. I have been investing in real estate in earnest since 2016, primarily as a hard money lender. Currently looking to expand my strategy into non-performing notes, and have founded BreezeBlock Capital LLC to serve this purpose.