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Performers Vs. Non-Performers: The Smart Guide To Buying During A Pandemic With Guest Host Jamie Bateman

October 16, 2020

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GDNI 120 | Buying During A Pandemic

 

With the recent news that US President Donald Trump contracted the coronavirus, the country is reminded of how serious the pandemic is. This realization has prompted a bit of a panic in the markets, including real estate. In this episode, Chris Seveney is joined by special guest host, Jamie Bateman, to talk about whether we should be buying performers on non-performers given the current market condition. Jamie is a mortgage notes and real estate investor focused on the first lien mortgage-note space through his company, Labrador Lending, LLC. Tune in to this today’s show to discover the best approach right now for buying notes.

Listen to the podcast here:

Performers Vs. Non-Performers: The Smart Guide To Buying During A Pandemic With Guest Host Jamie Bateman

I’m with my special guest host, Jamie Bateman. Jamie, how are you?

I’m doing great, Chris. I’m happy to be here.

I’m happy to be here as well. I think most of us woke up with some interesting news in the world. We do not talk politics, but I still think it should be worth noting. We found out that the President did come down with Coronavirus. It’s October 2020 and we want to talk about some frightening things, and this is frightening in the sense of how markets and everything is going to react based on this. I want to mention that as part of our intro and part of our trials and tribulations. With that, Jamie, what are some of the things that you have for people to share as part of either a story or something frightening since we’re in October 2020?

I was going to discuss a financially scary story that we experienced a few years back and this has to do with a rental property that we own. It’s not a note story. It was 2015, my wife and I had one rental for about 5 or 6 years. It’s a condo. I’ve talked about it before. It’s pretty low maintenance, so I didn’t count that. This rental property that we purchased with our second was truly the first one that I still consider the first real rental property in the sense that we decided to take our rental property business, buy and hold business to the next level and take it seriously. This is the first one of these properties of several that we plan to buy and get into actively. We buy this property and find a tenant who was highly qualified. She was an attorney. It’s around September, October 2020 timeframe and everything was great. She was excited to move in. We were all set up.

We do most of our rent collection through Cozy and she was fine with that at first. All of a sudden, I started seeing some issues where she had some lack of progress with moving in, to put it that way. She did not want to pay online because Cozy didn’t have a customer service line. I found this other online service where we could collect rent through. It seemed a little bit odd to me that it hadn’t been an issue before and now it was. All of a sudden, she wanted to pay by check. She hadn’t moved in yet, but I was already starting to see some issues but we moved forward. She wanted us to fix up a few things before she moved in. Being brand new to the rental business, we’re fixing everything we possibly can. When she says jump, we say, “How high?”

She moves in and all of a sudden she goes dark and I’m trying to get feedback on, “Does she like the house? Is she happy with what we fixed up?” She does not respond. She ends up lawyering up herself. As I said, she’s an attorney. Out of nowhere, we get contacted by an attorney saying that we need to start collecting our insurance paperwork because she’s sick from being exposed to COVID but airborne contaminants. Finally, I did get a response from her with a lawyer-esque type email that says with all these things she wants it done in the house, she’s been completely sick. The bottom line is she wanted out. She changed her mind for some other personal reason and this is my opinion, after having fixed up and gotten the place ready to move in.

She starts threatening to sue and all communication is going through her attorney. We’re supposed to be gathering our insurance paperwork. We’re new to this game at this point. Not that I welcome this to happen again, but I’d feel a little more well prepared and comfortable if it did. I talked my wife into hopping on board with this rental property train. We’re freaking out. Are we going to get sued? We have two attorneys coming after us, let alone, we’re heading into the fall season, which is a terrible time to try to rent a property. At least it’s not ideal around here. I spoke with several different attorneys. One is my friend in New York who I mentioned before. He said, “Why don’t you do a release? Have her sign a release that essentially we can’t talk specifics about what happened and we will agree not to sue each other.”

At end of the day, it was a scary story for sure. This is our foray into buy and hold real estate and we’re about to get sued right out of the gate. We lost about two month’s rent. I did negotiate a little bit and got her down. We let her go. All the legal advice we received was, “Just be thankful she’s not your tenant.” The funny thing is I spoke with another former boss of mine who’s an attorney and a real estate investor, commercial and residential. He said, “I never rent to attorneys. I won’t even rent to a law student. This is not legal advice. I’m not suggesting you rule out renting to attorneys, but it might be something to consider.” All in all, it could have been a lot worse but it was definitely a scary story as far as what could have happened to us.

As you go through life experiences, you’re going to fall. Just get up and go to the next one. Click To Tweet

I’ve had an issue with a tenant like that and the benefit of it being a rental is typically in cases like that, you just say, “We won’t charge anything. Move out.” Talking with Brian, our attorney who we love, he mentioned to give them that option. They can’t come after you for money or damages because you give them the option to move. Even if we paid for their move, it’s like, “If you don’t think it’s healthy, why are you still living there?”

To give you an idea, I was involved in a condo lawsuit with a similar issue. I had to give a twelve-hour deposition. This was a multimillion-dollar lawsuit. I was the key person involved in it because I was managing the project. It was stressful. The attorney’s fees on this one were 7, 8 digits probably. That’s where they ended up. I know there are at least seven, they ended up eight. It’s interesting because as you go through these life experiences and this is one of the things in note investing that is key and I mentioned this in a prior episode.

The first time you get a letter from some opposing attorney, from a city or a county that you have a violation or they’re going to charge you with a misdemeanor and stuff, you freak out. Once you get through a few of them, it’s like falling on a bike. It’s like, “Get up and go to the next one.” A perfect example is for my scary story. I got a house burned down. Most people would be flipping out. I went and took it like it’s raining outside. I was like, “Okay,” type of thing. The reality is, what else am I going to do? I spoke with the fire department. The interesting thing was I had already spoken to them about seeing if they would do a controlled burn on this and they’re like, “We don’t do this.” The guy laughed and he goes, “You got your controlled burn.” I already spoke to him before. It was a foreclosure and I posted some of the pictures online.

This was the one that had so much trash in it. You couldn’t walk into the bathroom or kitchen. I don’t know how these people are living, but they’re also involved in some illegal substances. When they got evicted, they had a trailer that they moved to the lot next door that they didn’t even own and they were living on that trailer. The fire department, the fire chief mentioned that somebody burned down their trailer and I’m like, “I wish I would have known that because I could have witnesses.” My guess is they may have owed somebody something or who knows what? It’s fun to speculate sometimes. 

Things like that, usually aren’t random.

Somebody randomly burns down your trailer only to randomly burn down the house they’re living in three days later. It got burned down and I was listing this thing for $12,000 to sell. The value is in the land. It’s on a river, but it’s in a flood plain. I had it under agreement with a seller for $7,500 or something along those lines. It was an REO that I had foreclosed on. I paid $500 for the note. I wasn’t in it for a lot all-in. I’m probably in it for $4,000 or $5,000. I’ve got it under agreement for $7,500 to a guy from California. It burns down. He’s like, “Great.” I’m thinking, “Maybe I should raise the price” from that perspective but we didn’t. I let the attorney know and the fire department was explaining what happened and stuff. From an insurance perspective, I did have insurance on it but I didn’t have a lot on it. I don’t even know if it’s worth getting the claim. I have to talk to my insurance side of things. If I would have done the $90 a square-foot, then that would have been a nice payday. I had insured it for what it was worth. It wasn’t significant from that perspective.

I’m curious, how do you approach FPI in general on your deals? I know some investors get FPI for the amount they’re into it for a period and that’s it. Does it vary based on the deal or how do you approach the level of FPI that you get?

It’s something I’m evaluating now because typically I would do it on what the UPB is or the lesser of the UPB or the value. I’ve been talking with our insurance carrier. We use JB Lloyd. If you don’t do the $90 a square-foot, it gets adjusted on what your claim can be. One of the things that have me thinking as well and this food for thought is especially on performing loans, a house is worth $90 a square foot. If it’s 1,000 square-foot house, why not insure it for $90,000 because the borrower is paying that bill especially on a performing asset? Why under-insure it?

GDNI 120 | Buying During A Pandemic

Buying During A Pandemic: One of the risks with performers is that it can go non-performing, and then you just overpaid for a non-performing note.

 

On non-performing, that does come out of your pocket, but on the same token, it’s also higher risk sometimes. By the end of 2020, I’m going to put together for myself a corporate insurance plan of I’m going to define how I’m going to treat every deal. I’d come up and say, “This is how I’m going to do it.” When you think about running your business like a company, you should come up with a corporate policy. I’m going to come up with a new policy because I’ve been doing this and that and everything else. When that kind of something happened, it’s like, “I need to come up with something that is definitive.”

I can relate to that. We’ve been a little bit all over the map with the amount that we get for force-placed insurance.

It’s one of those things that people forget about. One of the things people will also forget about is you may get it through your servicer, but the moment that gets de-boarded and foreclosed upon, you better get insurance on it. Thankfully in this one, I had it all the time under my entity. I didn’t have it with a servicer, but something that I know some people in the past have forgotten to do and have paid dearly for it. One thing I’ve also heard is making sure that the place is secure with smoke detectors and other things like that because that could void a claim. This is food for thought that we’ll have a whole another episode down the line on force-placed insurance. Let’s roll into our main segment. What are we going to talk about?

We were going to talk about in general, whether note investors should be approaching the market buying non-performers or performers given the market conditions and different things. What’s the best approach now for buying notes?

Since I have the seniority over you, I’m going to have you go first.

We’ll get to what you’ve been doing, which is more non-performers. I do think we’re going to start pivoting that way primarily based on market conditions. Nobody knows. This has been a strange year in general, across the board. In many ways, 2020 has been very odd. No one knows what’s going to happen to real estate, notes or anything like that. I would guess, there’s going to be some more non-performers here in the next months. I do think that’s the way to go. If you’re already buying non-performers, you’ve mitigated a lot of that risk. One of the risks with performers is that it can go non-performing and then you just overpaid for nonperforming note. A lot of people approach the note business if they’re brand new saying, “Performers are not risky and non-performers are risky.” Like everything else in this business and life, there’s way more nuance to it. It’s not that black and white. If you pay $0.80 to $0.90 on the dollar and the loan goes non-performing, that’s not good.

What we have been doing personally with our business is we have been buying more performers this 2020. I will say that’s more based on our own business model. We’ve been selling a lot of partials this 2020 and partials work considerably better with performing notes. If I sell a partial, I like to go out and buy another strong performer. The performers we have been buying are equity protected. This is one difference may be from 2019. We may have been buying, performing notes or CFDs that have less equity.

The performers I’ve been buying are more equity protected. The yields are lower, for sure which makes sense. We can talk about the pricing of notes as well. Given the market conditions where everything is headed, we’re going to start heading more toward the nonperforming space. One thing I want to make sure I do say for everybody, don’t only consider market conditions. Consider your experience level, your goals, and your business model. There are a lot of factors besides just the pricing of notes or where we’re headed in the marketplace. Those are my initial thoughts.

When you think about running a business, you should come up with a corporate policy that is very definitive. Click To Tweet

I agree with that a lot. One thing you also have to focus on as part of the conversation is the pricing of the asset. That’s where I’ve been leaning more towards on the nonperforming. The reason why is with the performing assets, I’m seeing people list CFDs for $0.95, $0.98 on the dollar. It’s an 8% or 9% return. To me, there’s not a lot of the house that needs work. There’s not a lot of equity in it. As you said, most people that I find do not know how to measure risk.

People, just plug numbers into a calculator and say, “Here’s what I can get for 12%.” I see posts on BiggerPockets or I see somebody saying, “I’m close to buying a note, but I don’t have a calculator.” Somebody shared a calculator. I’m sitting there scratching my head like, “There’s more to just the calculator. You need to understand that a calculator is garbage in, garbage out. It’s only as good as the data you put in and the moment you put it in, it’s wrong.” Have you ever had a deal go exactly as you put it in your calculator?

No, not at all.

I always recommend to somebody starting out to buy a performing loan that had a consistent pay history for several years that is secured by equity. I stand by that and. I tell people that’s what you want to do. In the same token, if somebody is trying to sell it at par, then as an experienced investor, that’s not my cup of tea. For somebody newer, that’s something you’ll want to look at. You still got to be careful because paying $0.95, $0.98 on the dollar when you’re looking at $20,000, $30,000 assets, it can get expensive quick if that goes nonperforming.

I’ll share a story with an investor who I sold an asset to. It was performing at the time. They bought it based on a 15% return and it ends up going nonperforming. Now it’s an REO that they’ve taken back. The property is worth a third of what they have in it. They’re going to lose some considerable money on this thing. Maybe they could possibly fix it up, put it as a rental, turn around, and sell it and play the long game, or they could sell it and they’re going to lose $10,000, $15,000 on this thing. This was a $20,000 asset they bought. The UPB at the time was, $28,000, $30,000, and after legal and everything, they’re in it for $25,000 and the place is worth less than that, so that can happen.

This one of the things I love about notes. There’s collateral. When you’re buying an Amazon stock or whatever, there’s no collateral. Why are you taking away one of the key advantages to this alternative asset class, the collateral? That’s important. I know it’s exciting to go buy a note, but it’s also important to assume it’s going to go south. Do your best to evaluate that property value.

When I’m looking at assets, the struggle is I would love to put some more performers in my portfolio because I love to have a mixed portfolio. We’ve got people who want some partials and so forth, but I tell them, “I don’t have anything,” because the stuff that I’m seeing is overly priced. On the flip side, I’m picking up nonperforming assets at prices still between $0.25, $0.50 on the dollar. I view that as having more work, but lower risk than picking up a performer at $0.95 on a dollar if you can believe that.

It depends on the situation for the individual investor too. You have a full-time job and you may not need that cashflow every month but somebody’s starting out, they may want that cashflow or maybe somebody who’s retired, they’re not looking to do all this work and get a big payday after few years. It does depend on the personal situation as well.

GDNI 120 | Buying During A Pandemic

Buying During A Pandemic: 2020 has been a very odd year; no one really knows what will happen to real estate or notes.

 

You see pricing especially on the performers starting to come back down to returns. What we’ve seen in the past were notes were around 12% and 15% in CFDs. Do you see it coming back to that?

Nobody knows. I would guess it would go the opposite way. I know pricing has gone up, the yields have gone down on performers, but I’m not sure. We’re out of the woods here. The performing notes that remain performing in the next 1 to 2 years are going to be valued that much higher. Predicting things is not a business you should necessarily be in but the gap stays there or it gets even wider between performing and nonperforming. If your performers remain performing, wouldn’t you think they would have just as much value if not more in the next 1 to 2 years?

It’s funny you mentioned it because I have a dartboard right in front of me. Every time I think of something, it’s like throwing a dart and trying to guess when you’re trying to predict. Part of the challenge right now is we are in such unprecedented times with so much going on in the world so people look for something that is more stable. Where I’ll take the opposite spectrum to bounce ideas back and forth against each other is, with moratoriums like the government-sponsored entities, having foreclosures by the end of 2020, we’re starting to see foreclosure upticks.

You’re going to start seeing more assets on the market. If you’re starting to see more assets on the market, will that lead to lower pricing? The question comes back to, maybe you’re still getting nonperformers at lower pricing, but maybe those performers are staying higher returns. If that’s the case, then my strategy is going to be by nonperformers, get these things worked out and sell them in performing rates. If they’re that high, then people can do well if that’s the case.

The pricing of notes both performers and nonperformers could come down because there’s more supply. I bid on a few assets on tape and these are all the in forbearance and it could be 6 to 12 months that they’re not paying. The pricing expectation is that they’re all high-end performers. A lot of those are going to go non-performing. It may bring down the pricing of the notes across the board so we’ll see.

I got twenty assets sent back to me that I can lock up and to give an idea, overall average is about $0.25 on the dollar roughly. I’m going to evaluate that.

I think you are mitigating a lot of that risk there. People talk about in 2010, you could buy nonperformers for $0.10 on the dollar, which I don’t know if that’s true. Let’s say you end up buying this pool for $0.20 on the dollar. I don’t think we’re going to see anything as we did in 2010. How much lower can those nonperformers go? Not much lower.

One of the challenges is if I evaluate the sales price that’s based off UPB, but if I did the lower of the UPB and value the number is closer to about $0.45 on a dollar is my guess. For example, one asset has got a UPB of over $400,000 and the place is worth a little over $200,000. That one is closer to $0.60 on the dollar because it’s in Florida, which is a $200,000 asset. It’s already in foreclosure. Other ones on here, I see some that are $0.20, $0.30 on the dollar, UPB and they do have equity in them as well. It’ll be interesting. Also, as part of pricing, buying in bulk versus buying one-offs. As you start to grow, people need to have that expectation. I’m talking about $0.25, $0.40 on a dollar. This is a buy of a few hundred thousand dollars. If you’re buying one asset from one person, you’re not going to get that type of discount. You can still get it.

In such unprecedented times, with so much going on in the world, people are looking for something more stable. Click To Tweet

I’ve got an asset on a Paperstac that the property is worth $20,000-something. I got it listed for $5,000 at one time and people were coming back and offering me $2,000 or $3,000. I jack the price up to $8,000 because if someone offered me $5,000 for it. They can have it. It’s one that it’s going to be a foreclosure or the person went dark. It’s in one of my funds and I’m starting to liquidate some of my nonperformers in the funds because I’m going to be closing the fund in less than a year. I’m slowly starting to liquidate those now and there’s going to be an opportunity.

You’re going to see an opportunity but I see many people asking me, “You got performers? I’m like, “Yes, but I’m holding onto them right now.” I’m just trying to liquidate some of these nonperformers because with these performers, I won’t have as much trouble liquidating them. There’s going to be that opportunity and it goes back to that interesting perspective of everyone right now is looking for one thing. Should you be zigging when everyone is zagging or vice versa?

That’s one of Warren Buffett’s quote about, “Being fearful when others are greedy and greedy when others are fearful.” It’s doing the opposite of what the crowd is doing. I wouldn’t necessarily say that’s what you should always do. Sometimes there’s a good reason for what the crowd is doing.

It’s interesting you bring up Buffett and that quote because one of the things that I was taught through the corporate world was to follow the big money. Like the Buffett’s, but follow what the big REITs are doing and some of these other firms, because the number of analysts and people they have studying markets is insane. When you see a lot of these REITs selling a lot of their properties for 4%, 5% or 6% cap and they’re making so much money off it and they’ve got a lot of cash sitting on the sidelines, that’s a predictor of things to come as well. You’ve got a lot of other investors buying and if you’ve got REITs and I’m talking more on the commercial side of things and multifamily, they’re selling them and I would too. If I had multifamily and someone offered me a 4% or 5% cap, I’d sell it right now and wait and see what’s going on. Especially right now where people are still paying rent, but there’s going to be a lot of laws coming out in that function.

I also think there are laws coming out with note investing, which we’ve seen in California. It’s going to become a lot more licensed-based from that perspective. We’re shifting a little focus of getting onto staying ahead of the curve for those types of things, but it ties into what we’re talking about because it’s all about risk. One of the things that people need to look at is a risk. Jamie, for you, what are you looking at for performance? For example, I’m seeing stuff at 8% to 10% and from the common sources, as some of these servicers and other sites that sell, what are your thoughts? What are you seeing and what are you trying to target?

The pricing expectations I’ve seen on tapes have been right in that ballpark, 8% or 9% even. We bought two strong performers in Florida that were more in the 11% range. In 2019, I’d would have said, “That’s too expensive.” I’m okay taking a little bit of a hit as compared to where we were if that’s where the market is. We’ve lowered our pricing expectations on performers. When I started in the note space, it was more 12% to 15% as far as your yield, especially under $50,000, UPB or maybe CFDs. I think that’s come down to 10% to 12% for those types of assets. The higher equity, higher dollar notes is more in the 8% to 10% range.

I’m trying to be more direct. Anything 10% to 12% that’s equity-protected is what I’m looking for. Specifically, as far as geography. We just got licensed in Georgia as you know. I’m heavily focused myself on Southeast Georgia and Florida since we do have some good boots on the ground down there with attorneys and property management companies. Pricing has come down, but that’s our buy box right now, if you will.

I’m seeing the same things, 8% to 10%. I still target well over higher. One of the things that we haven’t touched upon and we need to talk about is what the hell is a performing note? A person was paying pre-COVID and haven’t paid in six months so it’s a performer. No, it’s not.

GDNI 120 | Buying During A Pandemic

Buying During A Pandemic: Given the market condition, we’re heading more toward the non-performing space.

 

“We originated the seller finance note weeks ago. The first payment is next month. It’s a performer.” I don’t get that at all.

The person assigned in March and April made 3 out of 6 payments. You’re like, “It’s got the performer rubber stamp on it.” I’m like, “What are you talking about?” Let’s educate people because that’s important as well because some people may be like, “I’m happy paying 10% for a performing note, especially getting started.” Is it really a performing note? What’s your definition?

I would say 10 to 12 months of on-time or close to on-time payments in the last twelve months, something like that. Six months is not long enough. It has to be on time. I’m okay if they were late a couple of times, but I’d say 10 to 12 payments in the last twelve months and certainly not more than 60 days behind at any point during that twelve months.

For me, it’s the same thing. If the payment is due on the 1st, they make a payment on the 10th or the 17th. If they’re making payments every month, I’m fine with that. I like to go back a year because like you said, things can happen during that time. If they’ve missed a payment during the year, I’d still consider it performer too. Two, I’m starting to discount it. If it’s more than two, then I’m starting to discount it. Not maybe full nonperforming, but it’s getting discounted further. I was talking 14%, maybe I’m going to target 17% because I’m running my calculator of, “Instead of getting twelve payments, I’m only going to get ten.” What does that look like in your calculator? Some of the things that you look at from that perspective are those cases. I know people on the flip side, so I’m going to ask you this question. If someone misses two months and pays every three months, but they pay all three months during that time, performer or nonperformer?

You’re talking if they every three months in general but they get caught up? I’m putting that more in the sub-performer non-performer category. They can be just as much work as a non-performer. The person is paid up, they’re caught up, but it’s not the same as a monthly payment.

Here’s the other reason why I put that in the nonperformer bucket. What’s your servicer charging you? It drives you nuts. You’re getting charged at $90 a month or whatever it is because this jackass pays every three months and it frustrates the heck. When I see that, I’ll bet it more as a non-performer. This is the stuff that I enjoy talking about on the show because there’s nowhere and nobody talks about this in any type of training of how do you evaluate something like this. This is the gray area of note investing that you need to think of all the ramifications.

I can speak for how we price things. I have a performing calculator that was yours, Chris. It’s on your website, your freebies. That’s what I use for performing pricing. I have another calculator that I use for nonperformers. In that sense, I do approach all assets as either nonperforming or performing, but there’s much gray like you’re touching on. I’ve bought several in 2020 that are more in the sub-performer category. I haven’t bought anything that’s some of the stuff that you’re not afraid of. I haven’t gone near where there hasn’t been a payment in the last few years.

I do like that sub-performing space where they’re paying, there’s communication and there’s contact with the borrower. There’s clearly interest that they want to stay in the property, but they’re 2 or 3 years behind with payments though. As far as pricing, I’ll run it through both calculators and see what we come up with. It’s certainly not a performer, but I wouldn’t necessarily price it as a full nonperformer if they’re making payments every month. Approaching pricing comes with experience and figuring out what you’re targeting.

Don’t always do the opposite of what the crowd is doing, because sometimes they have a very good reason for doing it. Click To Tweet

I could argue that I would rather buy a note where the person has been making several payments and they’re three years behind than somebody who’s technically current, but paying every three months. I would argue all day long that the one that’s three years behind but they’re making some payments is much more valuable than the other one. People are scratching their heads like, “What are you talking about?” I’ll do a case study at some point in time on it to explain why. There are reasons that would take a whole episode to discuss from that perspective.

You’re right about the servicing costs. That is something people overlook. Madison, for example and I get why they do this. I’m not knocking this, but they have to see three on-time payments before they’ll switch it from nonperforming to performing, and that’s a substantial difference in cost to the investor. The other thing is not just servicing costs but legal. I’ve had several where someone’s paying every few months. We start to get legal going. We send a demand letter and now they reinstate. You can put those legal costs as part of the payoff, but there’s much work involved and communication with your attorney and actual costs involved. I agree with you. That’s more of a nonperformer.

We’ve talked a good amount about where we should go with performers and nonperformers? What is a performer? It’s always good to have these conversations because the reality is stuff changes. The conversation we had months ago, we may have done an episode on is different than it is now. It’s important to constantly keep people up-to-date and up to speed on things. I will roll into our final segment. One of the things that I look at in performing assets for my Note and Bolt tip is if you haven’t seen the entire pay history yet, or you got it but you haven’t seen the servicing notes. One of the things I look at is the date they paid. If they’re paying the same date every month or it fluctuates by a day, there is a good chance that they’re paying by ACH.

In my research and my past history, I have found the people who are on ACH are much consistent payers than the people who mail in the checks every month because life happens and people forgot to mail it or whatever happens. When it’s on ACH, which is automated to come out on a certain day, every month, I see a lot more consistency in those. I also think they should be worth a little more. When you’re on websites, use Paperstac as an example, when somebody puts in the pay history there and you see on the second of every month that payment is coming out or it’s been paid on that day, it’s a good chance that’s on ACH. As a go-to, start doing some of your more due diligence or you get an offer accepted, you can confirm it. It’s a tip that I look at sometimes when they provide the dates for the pay history upfront to give you an idea of how they’re paying.

My Note and Bolt is going to be more targeting brand-new investors. It doesn’t only apply to note investing, but see where you can add value. That’s my tip. You see people in these Facebook groups posting, “How do I do this? How do I price a nonperformer? What’s your due diligence checklist?” Don’t get me wrong. I’ve learned a ton from you, Chris, and from a lot of other more experienced investors. I take that knowledge and try to apply it. I don’t want to act like I don’t receive help from others. If you’re brand new, starting out, then figure out where you can offer value to a more senior investor or it’s all about solving problems for people. I would say, don’t approach this knowledge-seeking journey as give me. It’s, “What can you offer,” and then you’ll get something back in return.

I’ll add onto that a little bit, because coming from the corporate world, the rule of thumb is anytime you go to a superior with a problem, you should have the solution in hand or an idea or some options. I relate this a little bit to note investing when you’re learning and we’re on the same page. Some will post, “What states do you like to invest in?” That’s open-ended, and I’m like, “I like Maryland because I got boots on the ground.” That might not fit you and you might live in Cleveland and be like, “I like Cleveland because I lived there.” The thing I would say is instead of asking that question, ask the question, “I was looking on BiggerPockets and on Facebook group, and I see a lot of people like Florida. I know that it’s a judicial state. Why do people like Florida?” Now, if somebody asked that question as a newbie, I would be like, “The person did their research and the person did some background on it. That person wants to learn.” I would have much more respect for that person.

Just read through the previous forums. It’s not to say like, “I don’t want to come across. Don’t ever ask me a question. Read all my blog posts first, before you speak to me.” It’s not like that. If there was a recent post in the forum about this particular topic, maybe go check that out first. Like you’re saying, show that you’ve done some work and show that you’re willing to put in some effort. I feel like this is parenting or something.

One of the things I’ve looked at a lot and I posted this in the group was about Facebook. We have the Facebook group and I’ve got 1,200 members in there. In Facebook groups, there’s no way to segregate any of the information. I’ve been looking at sites like Money Network, Circle.so and Tribe.so, which are more community platforms that you can break things down like a BiggerPockets. For note investing where there’s a discussion on due diligence and there’s a discussion on force-placed insurance. I’m looking at it and I’m like, “That would be beneficial.” In the same token, I know a lot of people are stuck on Facebook and stuff, and it’s easy because you just go to Facebook to check something. I go back and forth on this just because I have 1,200 people in the group doesn’t mean that many are active. If it’s a place where people want to go learn, then if they don’t want to take the two minutes to go somewhere else besides Facebook, then they’re not seeking to be educated in that sense.

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It’s okay to have both options. To me, I’m hearing the quality versus quantity. You might have a lot of members in the group, but are they all active and interested? I took Facebook off my phone. I was close to getting off of Facebook. It was note groups that kept me on and I only go to note groups on Facebook. I’m more interested in something that’s more organized and I’d be happy to get away from Facebook myself.

For me, I use Facebook for a note group and Notes and Bolts. I’m in other groups, but I’m not super active in them. Sometimes I get overboard and try and take things over, but I use it also, for example, I want to buy a piece of property in a specific location. I’m a part of a group in that area. I am interested in learning about a certain topic so I’m in a group for that as an example. From a friendship perspective, my friends on Facebook are few and far in between. I’ll be honest, most note investors, I’m not friends with because I started friending some of them, then I see them posting all this political stuff and I’m like, “I don’t need to deal with this.” I’m seeing it now on LinkedIn with political stuff and I’m like, “Come on.”

Nothing is sacred anymore.

As always, you can find us on every platform out there iTunes, Stitcher, Google Play, iHeart and Amazon. I’m announcing some numbers that I was pumped about that I saw that I forward to you. We’ll keep that secret now, but we’ll be announcing that because things have been going well on the show. Jamie, any final thoughts?

Thanks for having me. I appreciate it. If anybody does have help with anything, feel free to reach out. I don’t want to come across like I’m not here to help. I definitely am.

Thank you, all.

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