If you’re looking to build your note business beyond just a couple of notes, you really should be thinking about investing on software. Differentiating from the majority of platforms that focus mainly on acquisition, Note Rules has created an easy-to-use mobile app that puts emphasis on tracking, doc management, and other aspects of asset management. This brilliant Podio-based platform is the brainchild of Richard McGrew, a systems genius who has been in the software industry for more than 20 years. Listen to this episode as he joins Chris Seveney and Jamie Bateman to demonstrate how the system works and what it can do for your note business.

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Note Rules: Asset Management App For Note Investors With Richard McGrew

We have a special guest with us. We have Richard McGrew from Note Rules, but he is also an investor who like me, loves systems. He has been investing in notes for a few years now. He’s been in the software industry for many years. He’s a father and an avid individual who likes to get up early. He’s somebody who I want to have on the show because he exemplifies how you can scale a business working full–time if you have the systems in place. He’s created a note system for investors who are looking to scale and Jamie is one of his clients. I want to thank you, Richard, for joining us. How are you? 

I’m doing great. Thank you very much for having me on, guys. I appreciate it. 

Jamie, how are you? 

I’m doing well, Chris. I’m focused on 2021 and ready to put 2020 behind us. 

Richard, I did a brief intro. Why don’t you talk a little bit more about yourself and also break into a little bit more on what you created and why you created it? I’ve got a million questions for you, but we’ll talk about how it can help investors from that perspective. 

I’ve been doing this for years now. I’m a father, a husband and a serial entrepreneur. I’m always trying something new and I’ve got a couple of different businesses running in the software space. I started in note investing about many years ago trying to figure out how to accelerate my retirement out of the corporate world. I’ve been there twenty-plus years of writing software and managing big teams. I realized that the note investing space was an interesting space to get involved in and that it could be scaled quite well with partnerships and proper setup. As I started to invest, I realized that there are a lot of details to track. There’s a lot going on and a lot of different people you have to interact with. Every note is completely different and it’s like having a bunch of kids. Each kid is completely different no matter who the parents are. 

I often deal with borrowers with parenting. There are lots of similarities there. 

Counties and everything else. It’s all unique and what makes it interesting, but it also makes it difficult to track. I knew right away that I needed some sort of system to manage that. I started working on some software to do that. About a year in, I was at a note conference listening to a bunch of people talk about the problems they were having. They did these panels, everybody get together and talk about what their key problems are, then come back and share with the audience. 

At the end of that, I was shocked that everybody had this, more or less the same problem. It was around the organization, how they manage their business and how many different things there are to keep track of. I was sitting there, at first I was shocked because it didn’t seem that difficult and I’m not trying to pump myself up. I’m saying it didn’t seem like tracking all this was that a big problem for me. I had 34 notes. I didn’t think it was that hard. I started noodling on it and realized that most of them are stacks of paper. 

They were also using Post–It Notes and fourteen different Excel files. They had a lot of stuff going on. I thought, “That’s not the way to do it. Why don’t you guys use this?” Nobody had heard of what I was doing because I haven’t shared it with anybody. I’ve built a system. Note Rules is the name of the system. People put their data into the system. Honestly, I can’t imagine running a note business using Excel and paper or even using these fancy servicing packages out there that are meant for servicers. There’s so much information in there. How do you keep track of what you’re doing? I think we need a simple workflow and simple step-by-step, “This is what you need to get done,” and as long as you have access to that data, you can be anywhere in the world and manage your note business and know what’s important. 

Few things that I took away from that and it hit me in the past, but it hit me and exemplified when you start out saying this. To be successful in note investing or not to be successful, those who grasp the concept much faster are those with project management experience because each note is like a project or its own individual business or entity in that sense. I come from a construction background, running projects and treat each note separately, almost like a subcontractor or a small project. That’s one thing. Two, you’ve already touched upon the systems and so forth and you’re right, there’s not that entry kind of level system. I used to try and use a CRM system and then I use an Excel database, the one online. That was cool. 

Now, I do use the servicing software because I do have 250–plus notes. I’ve got $20,000 invested into that. For somebody starting out, don’t invest $10,000 or $20,000 in software to start a note business because unless you’re buying $1 million–plus in pools, you buy an asset for $20,000 and you’re spending $10,000 on software. You’re not going to get a 50% return to cover that cost, unlike what some people may preach to you. 

If you’re going to run a large note business, you have the money to be able to fund custom software which is what you’ve done and that’s awesome. All the big note investors wind up funding custom software because you have big systems and lots of team members. I have two main packages. One targeted at new investors and one targeted at people more like Jamie that are scaling out their business, they’ve got twenty–plus notes and they want to go get into automated messaging and automated service or data collection. They want to get rid of some of the manual steps involved in managing each note. 

Most businesses, including the note business come down to three things, deal flow, sourcing and asset management. Sourcing of deals and then sourcing of money are two separate things and then asset management. What you’ve come up with and what you work on is the third part, which is asset management, which is often overlooked by newer note investors. Framing it in that way, what number of notes would you say is the breaking point where you need something that you offer? Would you say it’s 2, 10 or 20 notes? 

It depends on who you are. If you are an investor that is looking to buy two notes and that’s it, treat it like e a completely passive job. The servicer is going to do everything for you and you want to get the money. If you’re going to buy a super high–quality note, then you don’t need software. Excel is fine or even Post–It Notes and paper is fine for a business of that size. If you think you might want to scale, then I think you need software from the beginning. I don’t think you should wait. 

You should put a system in place. If you think you’re going to try to get the ten notes or more, you need software. In my first note, I can still tell you where it is, who the borrower was, how many bed and baths it was, what the community was like, what the house looks like and the acreage. I can tell you everything about that first note. Once I got to 3 or 4, they started to get jumbled in my head. Without software, there’s no way you can manage a note business. 

It’s more about where you’re headed than where you currently are.

 

It’s interesting too because in this world, there is information overload. Note investing is one of those businesses that does have that information overload, but there’s so much information that’s out there. When you go to buy a note, you want to know acreage, location, beds or baths. After you buy that note, you don’t care about that information because you’re focused on other aspects. What’s great about the systems you set up is you can customize them like you have with your system early on because I know yours goes through the whole due diligence process as well. You can focus early on, on certain tasks. Once those tasks are complete and then you go to the management, those important tasks are still there, but they’re in the backend and it focuses more on the important tasks now. In highlight though, is which during key points. I think that’s critical as part of any of this. 

I know in the beginning, a lot of newer note investors want that due diligence checklist. What is the checklist? Everyone has to create their own, tweak it and do what’s right for their business but that’s something that, Richard, you can speak to? 

We have an app in our solution that we call The Purchase App. We’re upgrading it to be The Transactions App because it turns out that those transactions, those activities in the due diligence are almost completely repeated during the sale of an asset. The flow is very similar. We’ve got a lot of user feedback that we need to cover both cases. The bottom line is when you go to buy an asset or sell an asset, you’ve got a lot of due diligence you have to get through and it’s not hard. You can download a checklist off of BiggerPockets or you can talk to Chris and Jamie, you can find the information on how to get through a transaction, but remembering to do it and that you got it done. 

When it’s completed, what did you complete? In our system, it gives you simple locations for tracking for due diligence, for example, on the tax reporting. After you call the county, you’ve got all your notes. A few years from now, when you’re trying to figure out why you’re getting a tax bill, you can go back and pull up your due diligence and see, “That’s right. There was a past due tax bill on this and we chose not to pay it because of this scenario.” Also I find if you don’t have that stuff put down in your system, you wind up going back to that collateral file over and over. Each time, that’s another fifteen minutes of your life lost and/or twenty minutes of your life spent chasing data that you already had and you should have had at your fingertips. Instead, you wasted your time trying to do it or worse you lost it and you can’t find that data anymore. 

With one note, that’s easy to remember. For example, I’ve got two notes that are on 6th Street and I’m confused which one is which all the time. You get a tape and you’re doing due diligence of ten assets and there are two borrowers named Smith or two John Does. It’s like, “Is this the one or this?” You’ll confuse them, “One of them with taxes and one of them was this.” 

I had to Vermont streets before I had ten loans, which was crazy. 

You’ve created this system and customized it for yourself but you now have gone out there and marketing it. It’s a Podio–based system, correct? 

Yes. The primary reason for choosing Podio is the ability to connect with everything else out there. It would be relatively simple for us to turn around and make this off of our own custom system. I haven’t been in the note business that long, but I’ve talked to a lot of people who have. Vendors come and go in this industry. We chose to go with a large company. Citrix is big and it owns Podio. If anything were to happen to me or to my business, Podio is still going to be there. Our systems are still going to be there. There’s nothing about what I’m doing that would block my customers from continuing to move forward. That was our primary. 

Uptime is super important if you’re out trying to manage your business. I didn’t want to be on a custom server and a custom system that goes down and then they want customer lines up with alliance down scenario. We’re based off of Podio. We’ve heavily customized it for the scaling investors that we serve. For someone like Jamie or yourself, if you were to choose to jump over, we have a bunch of automation that helps our customers do things like automated outreach to their customer base and their leads and other things like that. That connection is a huge value–add that we put on top of Podio. 

That was one of the things that I like to upfront was that you have different levels of service. The first couple of years for me was inexpensive. It still is. It’s still a good value, but we’ve upgraded both our Podio subscription as well as the Portfolio Activity Center under Note Rules. You can tailor it to what you need. We’re moving more into automating a lot of doc prep, outreach, marketing and that kind of thing that I didn’t necessarily need the first year. You can cater to where you are as well and Richard will scale along with you. 

For those looking to scale and you mentioned about getting systems, in the note business, everyone goes through this learning curve. I’m an engineer, so I take Calculus. I remember having to do a long way to figure out a derivative of something and you’ve got to do all this X, DX and all this other stuff. If it’s 2X squared, you dropped the two multiplied by the front and then subtract the X amount by one. After they show you this long-winded way to do this and you teach it. There’s this little simple backdoor trick. You need that background of how it’s done first. What’s nice about these systems is it mixes the best of both worlds in the fact that you still have to do that heavy lifting component and work your way through, but the systems do allow you. 

I’m more of a tracking purpose. It’s not cheating. I would say that was in calculus in a sense of, “You just do this,” and it’s the simple way out. The project management component that you need and people, I can’t scream loud enough how much of a systems person I am. I’ve got a recording I’m doing for Kimberly and how I stay sane with my note business. It’s truly about those systems. The same thing with you, Richard. You’re a serial entrepreneur. You’ve got a lot of stuff going on. You’re a father, you’ve got a kid and you’ve got 30 or 40 notes or you had at one time or still having so forth. How much time do you spend a day on your note business? 

Maybe fifteen minutes depending on the situation. There are days that burst over that. I have a very organized system that tells me what to do. I check that. If there’s nothing to do, I can move on and it’s that simple. 

People think that like, “I have ten notes. I’m going to spend three hours a day.” If you spend three hours a day doing something wrong. 

Going back to that Paperstac, trying to check and see what you’re supposed to do now and checking each note. That’s crazy. One thing I wanted to say when we were talking about due diligence, as you start to scale, you wind up with multiple team members typically because there’s a lot of manual steps that you can outsource. Our system is nicely built around a chat-based system and a multi-user integration, which allows all of our customers to be able to share all their data seamlessly. Your due diligence checklist, you can check something off. Jamie can check it and see that it was done, or I can check it and we get notifications that things are happening in our business, even when we’re not the ones doing the work. 

I’ve got a default note business that I use for my demos. I’ll walk through it at a 10,000–foot level, what I’m seeing when I glance at this. We have the standard Podio address bar which gives a ton of functionality. You all have your iPhone or your Android device using the apps. There are apps in this system that organize the data in a way that’s easy to find. You can also see who is working on the system and some running information around who’s been in there poking around and putting data into the system. 

I had to check because I saw that first asset in there and I’m like, “That looks familiar.” I have an asset on that street. 

There are also little mini reports. You can see there are twelve assets in this portfolio, 4 rentals, 4 performing notes, 2 REOs, 1 partial and 1 nonperforming note. You can see an idea of what your portfolio looks like as well as the different companies that are invested and how much money each has got invested as a group. These are links. You can click on any one of them and drop over to that particular company or that particular pool of assets. You can also have tasks in there. You’re going to have how much money you’re receiving each month, little reports. These are all customizable that pull the data out of your system and push it up onto your main screen. 

Under investments, if you had JV Partners, could you separate it by JV partners who’s got $100,000? 

That’s what these are. Note Rules is a company that has $580,000 in assets. Keen Funding is a company that has $183,000. In each deal, each asset that you purchase, you have a company that you use to purchase that asset. As long as you link that up and put that in the system, these reports are automatically generated. It’s right there for you. That’s the high level. We talked about workflow. Let’s take a look at the Purchase Transaction or Purchase App. This is a simple app that walks you through the purchase activity for any asset. 

I linked up to the asset. We have different stages of due diligence as you know. We go through due diligence, make an offer, sign an agreement, fund our asset, go through some boarding steps, deal with the collateral and then we get everything recorded. For this asset, 74% of those steps are completed. It looks like the initial steps are done through due diligence offer, PSA funding, and boarding, but we’re still reviewing collateral and we are getting ready for recording. 

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What’s nice with systems like this is the collateral component. People that start buying more notes getting to the purchase and sale agreement, is the simplest part. Herding all the cats of getting the loan boarded, getting the information back and forth to a servicer, getting them the information and the collateral. Jamie, how long would it take us around?  

It’s been several months. It’s September 30, 2020 and now it’s January 8, 2021. 

When you get into buying a pool and you have more than one person involved, I don’t know how you would keep track of all the steps that are required to make sure you got them all done properly and checked off. 

None of these steps are difficult, but I’ve run into cases where either I hadn’t bought in a few weeks or I was buying a bunch at the same time. If you’re not doing something every day, it becomes a perishable skill. I’ve had cases where it’s like, “I forgot to check PACER.” I bought a performing asset where I should have done a better job of checking the property taxes. You assume they’re caught up on their payments. 

They’re paying, why wouldn’t they pay their taxes? 

It’s not so much. It’s not hard to check the taxes, but we had 27,000 other things going on and missed that one. That keeps you on track. 

You buy 9 assets and somebody sends you 6 collateral files. I had that happen where I bought eleven assets and the collateral files come. It looks like a big stack, so I’m like, “I go through them all.” They sent me in a separate cover the allonges and the assignment, but all of a sudden it’s like, “I’ve got everything, but where are the three other files? How do you track that? Where does that go?” For the readers, these are the things you’ve got to think of. This business is not like anything in life. It’s not a nice straight road that looks like a runway.  

It’s more like off-roading with a map. It’s how it goes and stuff like this happens. This is the stuff that nobody teaches you. People talk about training and so forth. Everyone talks about all these perfect world scenarios or some one-off things, but this is reality and this is the stuff that, “How do you track this?” This is the stuff that makes or breaks because you can spend a boatload of time chasing a lot of this stuff or you can spend $20 or $50 a month, have a system, whatever it may be or $20,000 in regards to how it tracks all of your things. 

Let’s talk about some of the due diligence steps that you might take. This system is meant to be super simple to use. You can see that all of these buttons here have been checked, but when you start a brand-new purchase and use a brand-new due diligence step, you would start checking off these buttons one at a time until you finally complete all of the due diligence steps. You can see here that this was done. 

We bought this note back in 2018, but I still have all my notes regarding the due diligence steps, who I talked with, the county information, the tax situation and my final summary on do I think this due diligence is good enough to go ahead and purchase this asset? Go on to offer checklists and that is quite simple, but the point is all the steps are tracked. You can see exactly where you are. On the right, if there were multiple people involved in this transaction, it looks like there were not, but if there were, you would see their names in here and what they were doing. If they made any comments, you would see all the activities in the transaction. 

One nice thing I’ve enjoyed is the fact that you will tailor it for us. These aren’t the steps that we follow. As long as Podio can support it, we can tailor it to what we need. That’s helpful. 

It sounds like you mentioned when you talked about if you hit the lottery and go live on some exotic beach somewhere, once this is set up, it’s set it and forget it essentially. Now, it’s Podio-based from that point on. 

The basic systems that I’ve built, anybody could build, it comes down to, “Do you want to spend your time building systems or investing in notes or hanging out with your family? Where do you want to spend your time?” Once the systems are up and running, everything is set it and forget it. People can continue on without me even if they don’t need my help. I am active. I believe this business is super valuable for people. Me and my team spend a lot of our time helping people like Jamie scale their businesses. For the average note investor who has only got a couple of notes, we get them up and running. We get their assets installed quickly. Get over that learning hurdle that’s painful in the very beginning with any new software. 

Once they’re up and running, they don’t contact us for six months while they’re scaling their business. They come back around like Jamie, where they want to generate all their contract documents and don’t want to have to pay somebody or use Word merge or Excel merge. They want to get more formal about how they generate their documentation or they want to start scaling out and sending sourcing emails to their contacts or sending letters or postcards. That’s where we get back engaged again. 

I know you’re doing a little bit more integration with the servicers. Servicers play a super key role in all of this. Would you mind touching on how you’re doing that? 

There are a lot of different services out there and what I find myself as I run my business, you purchase an asset, you wind up with a servicer because that servicer came with the asset. You have to make a decision. Do you deboard that asset and put it with some other servicer, take the risk that the borrower is going to stop paying or use that as an excuse. If you buying a nonperforming note, do you want to service it with the company that’s currently doing it, who has got all the background, or do you want to move it over to somebody that you trust that manages notes the way you want to manage them? 

The bottom line is you’ve got all these decisions to make about how you’re servicing. At my peak, I had 34 notes and I wound up with 6 or 7 different servicers. I started finding I was spending more and more time in there tracking down what’s happening at the servicers. I started creeping up again. I realized I needed to start to scrape some of that data from the servicers and pull it into the portal. There is no reason in this connected world that I should have to visit ten different websites to track down what’s going on with my portfolio. What I started working on was pulling that data over from Allied, FCI, Madison and NAA. We’re integrated pretty well with Allied and NAA. I got requests for FCI and Madison. We’re actively looking into those and if anybody else has a servicer that they deal with on a regular basis, and it’s got a few notes there, we’d be happy to integrate with them as well. 

We have a workaround for the short-term. I’m sure that’s a short-term problem for them. We are going through the demo. We have an app that allows you to see all of your payments. There are two types of information you want to track at your servicer. You want to know, are you getting your payments and are they working with the borrowers? Are they sending contact information back and forth? What we’ve put together is a simple data poll that happens once a day that pulls all the data down from your servicer log-in accounts and pulls them into your Podio system. 

If I were to click on any one of these assets, you can see here this payment was received on December 1st, the principal, the interest, the advances, the servicing fee and what the actual remit value was. Down below that is what did the statement include and what were the fields. I’ve heard that some of the servicers change the data that’s available online on a regular basis. In the portal, you pull the data down one day, it might be different tomorrow. We have that setting available where you can choose to update it every time it changes or pull it the one time.

 

What Richard means by that is sometimes when they apply principal interest and late fees or something, especially if someone makes an overpayment, sometimes they may credit it first to the principal and then realize there were some advances or short on escrowing based on how the loan works. Allied I know does that, but also you’ll see on Madison for people. Those are the two I use. A lot of times what Madison will do is they’ll put it in reserve first. One day it might hit reserve and then three days later, they’ll move it from reserve into how it should be broken down. Those are some of those things to be cognizant of. Why they do that typically is the payment came in, they need to review to make sure they’re applying it correctly. The last thing you want is your servicer to not apply correctly. Jamie, how many servicers do you use? 

We‘re down to three. 

For people who use multiple services, for example, I have seven different accounts with Madison. It sounds like this software, instead of me having to log in to every single account, that would be seven at Madison and one in Allied, this shortcuts that and be able to see everything on this portal. 

Debbie might like this if we get it 100% up and running across all of our servicers from a bookkeeping standpoint. I should be negotiating her bill down a little bit if we can get this 100%. 

Most of us get these checks, these deposits that show up in our bank account, and it’s in single number that doesn’t tell you how much was principal, the interest, the fees, the return from prior advances that we had made. None of that data is available. It’s available. You can log into your seven accounts at Madison and you can find it, but it’s painful. If you decide you want to sell the asset, what’s your current unpaid balance? What’s your recent pay history? All that data is available at the servicer. If you’re willing to invest 15 or 20 minutes of your life, you can find all that data or you can have it at your fingertips. That’s where we’ve tried to collect all that data up. 

How about doc generation? Do you mind touching on that? 

You mentioned about the 15 or 20 minutes here and people need to realize that time adds up significantly. 

That’s per loan. 

People automate a lot of things and you work on your business, not in your business. One of the books tells you to work on your business, not in your business, which it’s true. You shouldn’t be chasing down all this little stuff. Even from stuff like here, if you want to sell an asset on Paperstac or on an online portal, everything is in here where it’s a one-stop–shop. Whereas if you log into, for example, on Allied and it’s like, “In Paperstac, what’s the original loan amount? That’s not in Allied’s portal. Where do you have that information? It’s in my collateral file.” Now I have to open my windows Explorer, find the collateral, open it up, see where it is, when was it originated and what’s the maturity date. Trust me, I know. 

That could take hours to pull all that data together to make a sale. That’s fine if you’re only selling one note. If you’re only doing one note, this system isn’t necessary. Before we jumped over to doc gen, I wanted to share the assets of you. The reason I brought it up was for this note, you’ve got the address and a quick little map. We’ve got a summary of the types of things that you would be most interested in every time you go to work on an asset. What type of loan is it? What’s the loan number? Is it a first lien or a junior lien? What’s the payment? What stage is this current asset in? 

We have one here which is paying loan. The last payment came in December 1st, 2020 for $766. Who is the borrower? Who are the purchaser and servicer? How many payments have been received or what the total value and payments have been received and remit as well? Typically, those numbers don’t equal each other. As any good note investor realizes, there are a lot of things that come out in fees and then what’s the current unpaid balance. Some of these numbers are enabled by hooking up to the servicer. Because we have that data connection, I have this in real–time data in here on when the last payment was, the total on remits and the current unpaid balance. All that’s automated because of the connection with the servicer. Do you want to talk about doc generation? 

If you don’t mind touching on that. 

As we started getting into selling our first couple of assets, we realized that there are a lot of steps in collecting all the data, getting it correct and having all that ready. As a new note investor, you don’t realize there are people that’ll generate these documents for you quite cheaply. Even if you can finally eventually find, Chris and Jamie can point you to the right person to do doc generation, it still takes 1 to 2 weeks and you have to iterate over the documents as issues are found. What we found is for the primary sales transactions, the content is generally about the same for the sale. 

You’ve got a sale agreement. You’ve got an allonge and assignment and you maybe have some servicer instructions and a few other items that you want to put out there depending on how formal you want to be. What we’ve created here is a simple system. It’s a doc merge, but it’s using the data that’s currently in your systems and tracking. It then generates the documents when you’re ready and you can print those out or ship them off. 

We are working on an integration with eSignature so that we can help you with a DocuSign type of process. That’s not quite done. We’re hoping to have that rolled out in Q1. On the bottom of this particular asset, it looks like the data is not plugged in on this example, but you have these buttons down at the bottom where you click on the button and it will generate for you the purchase and sale agreement, the assignment, the allonge, the special warranty deed, reconveyance of deed, instructions to servicer and the notice of sale receivable. All of these documents will be generated with a click of a button. 

If I have my own document that I’ve paid an attorney to help me work up, can you incorporate that as well? 

Yes, and we don’t provide the documents. We’re not lawyers and we don’t get paid to be them. You provide me the documents you’d like to use, we’ll get those uploaded for you. The developer takes about a week to get the first initial documents up and customized. Some people want these different fields bolded and different things like that. Once we get the configuration done which takes about a week, then the system is ready to go and you can generate these docs every time you want to use them for any assets. 

That’s something that we’re working with you on. Is there anything else with the tool itself you wanted to point out? 

A couple of other quick steps of things that I do that help me stay on track from a systems perspective. We have a different one. The most important thing for me, the reason I can spend such a small amount of time managing my business every day is because I have one simple view in Podio that I look at once a day and I’ll bring that view up here. This is a task list. I’m not personally a fan of tasks or reminders firing off. Several of my customers like those and we have a full–reminders–based tasks system that’s up and running. Myself, I’d rather look at one screen and get my tasks in my face every day. This is an example of what I look at, my assets screen. 

If you think you might want to scale, you’ll need to invest in software from the very beginning. Click To Tweet

The most important part for me is what I call the next step and the follow-up date. This view here is sorted by a follow-up date. There are a couple of my notes here in Mattoon, but everything else, the due dates are all there and you can see what the next steps are. Having some method to know what’s important and not important is critical in this business because those stacks of paper are large, and remembering what to work on, when to work on, it can waste so much time. For me, I know I’m late on a couple of assets. On everything else, there’s nothing due, nothing to work on. 

You showed me this a couple of years ago, and this is where I hang out most of the time. The next step is more of 1 week to 1 month out for me anyway. I do assign tasks to Steven Burke and my wife sometimes, but those are used differently. You can use it however you want, but this where I find it valuable. 

The other thing that I’ve been spending a lot of my time on lately is helping investors like Jamie and others that are scaling their business with the basic systems. Jamie, you and I, have started on that conversation, but several others, it’s just, “Let’s do a system review. Let’s figure out what steps you’re spending your time on that are consuming your day. Let’s figure out how to automate those steps out of your business.” 

It’s outside the PAC system. 

In general, most of the systems wind up coming right back here. If you’re trying to make an automated email outreach, I put a lot of time into that over the last six months to make sure that’s bulletproof and we can get you your steps out of the way in your space there. Due diligence steps, “What is it I’m working on now?” The point is there’s a lot of integrations we can do to help you reduce the steps you’re taking every day. 

You’ll see in Facebook groups or BiggerPockets, people will say, “What systems do you use for your note business?” It’s usually 5 to 10 systems. 

Typically, there’s this system. 

Your CRM and where you’re saving everything. 

There’s Pipedrive. There’s software out there that some people started using called ClickUp. I’ve heard positive things about the software. It would still need to be fully, completely customizable for you. It’s similar to a Podio where it’s a great system, but it’s not set up. You would have to do all the setting up, which as a new note investor, it’s not going to happen and stuff. Those are prime and once you get into servicing software, that’s a whole other different animal. Richard, I’m sure people are thinking, “This is great, but nobody’s told me and you guys are hiding from me, what does this cost?” 

We try to keep it low-end for the people that are getting started. Our lowest package is $24.95 a month. It allows you to have the unlimited number of notes you want to put in the system. It gives you your basic setup. It lets you track your assets, your purchase and sale activities, all the companies that you work with and the contacts that you work with. From there, as you decide you want to scale, we have additional packages. Our premium package is $70 a month. With that one, you also have to upgrade to the more advanced Podio version so that you can have some of their automation engine behind it. That runs on the order of about $100 a month. At that point, you get your automated email, messaging, letters, postcards and that kind of stuff, plus also your doc generation. You can go to NoteRules.com, go over to the pricing page. It’s all up there for the view. 

I know there was another service that was more of a CRM, NoteProz. 

They’re great guys. They’ve got a great due diligence system. There are a couple of other competitors out there that are doing some of what we’re doing, but none of them are focusing on note management. They’re focusing on some of the ancillary things like, “How do you figure out what your due diligence checklist is? How do you evaluate twenty notes all at one time and pick one?” They’re focused in on that acquisition, which is super important. We’ve talked about partnering together to leverage each other’s customers and move things back and forth. We’re doing that. There are other packages out there, but what people are missing, like you talked about the three different areas you focus on with sourcing and asset management. 

Sourcing deals and sourcing money. Where do you get the money to buy the deals? 

Most of them are focused on the asset acquisition. Very few people are focused on the asset management and making sure that the deal flow works properly which is where we focus. 

That’s what a lot of the training is focused on, “How to buy your first note. Best of luck to you.” If you don’t mind briefly touching on where you’re headed for 2021 and 2022. I know you’ve already addressed that a little bit with some potential partnerships and things, but where are you looking to move with your business?

 

We’re working more towards the scaling investor. I don’t think I’m ever going to be able to replace or tackle the investor that’s willing to invest $20,000 in their systems. That person is at the level where they need to have high-end sales automation, CRM like Salesforce and things like that. We’re not going to ever try to compete with that. Our niche is in the note investing space. We have chosen to stay there. In the asset investor between 5 and 150, 200 notes or something like that. We’re working heavily on servicer integration, on integration with people like NoteSchool and Paperstac to make sure we can transfer assets back and forth between those companies, ourselves, and our customers seamlessly. 

When you make a sale transaction, you can move that data back and forth. We’re working on more of the CRM capability so that we can help you with all your customer comms and sourcing of new leads. We have a lot of that functionality up and running, but making that bulletproof and tailored to the note business, not just a generic solution that you can then come in and customize. I’d rather make it a one-stop–shop that is easy to use and helps you advance your business. That’s where we’re focused. 

I’ve been happy with it. I can only imagine it’s going to get even better. 

Jamie, I know you’ve been using it. One thing it doesn’t do is say, “Make sure you buy quality assets.” 

It’s similar to people say, “What do you think of Paperstac?” As an example. I love Paperstac. Those guys are great. It helps you with the checklist of buying, going through the transaction and everything. I don’t put anything on them. You do your own due diligence on the asset and the person you’re dealing with. That’s not their problem. 

This is a great system for tracking stuff. It helps you manage but it doesn’t manage for you. 

It’s like the servicers. The new note investor thinks the servicer is going to do everything for them. At a 10,000–foot level, that might be true. If you don’t have any interest in getting payments on time or getting things done quickly, then the servicers are great. The reality is you need to manage your business. A servicer is just one more vendor that you need to stay on top of. How are you keeping yourself organized and not investing all day long every day managing your note business? 

Not only your servicer, your attorney and your preservation company. Richard, thank you for joining us. Jamie, any final comments? 

It’s been great. I appreciate it, Richard. We’ll have to get together so we can go over how I’m running my business, not just the Note Rules part of it. 

There are a lot of things that we can do to help improve, streamline and get rid of those manual steps. 

You mentioned people can reach out to you at NoteRules.com. Is that correct? 

My email address is Richard@ProminentFunding.com. In NoteRules.com, there’s a Contact Us page there also if you can’t find me by email. 

Thank you all for joining us on this episode. As always, make sure to subscribe to us on YouTube as well as at your favorite audio listening station. Thank you all. Go out and do some good deeds. 

Important Links:

• Note Rules 
• Podio 
• Pipedrive 
• ClickUp 
• NoteProz 
• NoteSchool 
• Paperstac 
• Richard@ProminentFunding.com 
• Contact Us tab – Note Rules 
• YouTube – 7E Investments 

About Richard McGrew

Mr. McGrew has been an active note investor since early 2016, specializing in 1st-lien performing and non-performing notes across the nation. Over the past two decades, he managed large worldwide teams for a multi-national corporation. He is responsible for $40M development projects with revenue >$1B.

Our company purchases notes on small balance real estate (SBRE) with typical property values of $30k-$120k. These small notes are “overlooked” by the large investors because they don’t have nearly the profit that a California $500k note would have.

We focus on “distressed” notes, buying them at a discount, so that in the event of a real estate downturn or other unforeseen events, our investment has a good chance to still be less than the value of the real estate that backs the note.

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