E327 | Marco Bario on How Hollywood Chaos Prepared Him for Note Investing – PTNC Know Your Speakers Series

On this episode of the Paper Trail podcast, I interviewed Marco Barrio from Porch Swing Funding.

Marco will be speaking at the event, which is September 18th to 20th in Chandler, Arizona.

For more information again, check out papertrailconference.com Love this conversation.

A lot of insights and interesting comments about maturity and patience within investing.

And that's an area where a lot of people miss the boat in regards to having that patience and really focused on one opportunity and taking one foot in front of the next.

So hope you enjoy this episode with Marco and look forward to seeing you.

September in Chandler, Arizona.

Hey Marco, how are you today?

I'm good, Chris.

How are you?

Good.

It's a Friday afternoon.

I put on a shirt my wife recently bought me because she always complains that she buys me things that I don't use or wear because I have, like, favorites.

And as a man on Creature of Habit, you just have, you know, stick to the same thing all the time.

But my wife actually was like this morning, she's like, I'm proud of you.

I'm like, oh, what'd I do?

She's like, you're wearing your new shirt.

So I think that was a smart choice.

But yeah, people listeners aren't here to hear about my attire in any way, shape or form.

They are here to listen to, love to learn more about you and talk about the upcoming Paper Trail conference we're hosting and you are going to be speaking.

So thank you very much.

What I'd like to do is start with your story.

How did you get started in investing in the first place?

My story starts in Hollywood.

Like all stories.

Ultimately, no, my story starts in Hollywood.

I was a burned out Hollywood film and television, I don't know, employee, worker, executive.

I worked in the Hollywood film and television industry for about, I don't know, 17 years or so.

I worked in production.

I spent a lot of money.

We had a budget and we couldn't go over budget.

But I never learned how to make money until eventually I did change roles in Hollywood.

And I worked for a large company called Technicolor.

And that's the first time they threw me in a room and showed me a profit and loss statement.

And it wasn't, it didn't look good, I can tell you.

And we had our work cut out for us.

So although parts of that experience weren't where I wanted to be long term, I got the bug to become an entrepreneur.

Yep.

A lot of people get that bug.

How old were you when you got the bug?

I was mid-40s.

Okay.

Yep.

So it's interesting.

I saw a post on I forget where, you know, I'm on bigger pockets, Reddit, Facebook, and you know, where I death scroll in the evening sometime.

And somebody asked a question that I'm 42 years old.

Am I too old to be an entrepreneur?

And I was like, immediately like, you're still young.

Like, you know, I think there's studies out there that most people don't start till they're in their 50s.

You know, to a lot of entrepreneurs.

I'm not surprised I do something really different than what I'd done previously.

But the life experience has helped a lot.

Yeah.

To, you know, when, when my kids were looking.

This is off topic and I'll just take a second.

But when my kids were figuring out, you know, what they want to be when they grow up, I.

E.

What are they going to study in college?

I'm like, kind of doesn't matter.

Go have the college experience.

And I do something really different than what I studied in college.

But it's okay.

I still brought a lot with me.

Yeah.

I think it was Gary Vaynerchuk or somebody made the comment, college isn't really there to make you an expert at anything.

It's there to show a future employer that you can spend four years focused and learning and get through a type of process before as you start to mature, so you're starting to be ready for the real world, whether it's doing degree in X or Y.

Now, some degrees, of course, you know, are much better than others.

I think everyone can agree to that.

But really the basis of it is, you know, to focus on something for a period of time and be able to accomplish it and prove that you can get something done during that time.

So employers in the future can look at and say, okay, this person has some responsibilities.

So I actually proved to myself I could do that.

I would.

I studied television production and they threw us in a studio and they threw us in live events and out in the street with cameras and we had to, like, figure out how to make things and, and I build a lot of confidence in the process.

So I, I'm one who argues for college for that reason.

Yep.

So what's something about your journey that, you know, most people don't know, but.

Probably should, you know, that I, I, I tipped it a bit.

My background had nothing to do with real estate until my mid-40s.

And there's, there's a book.

I didn't know about the book at the time.

It probably wasn't out, but there's an author named Jen Sincero.

And I quote her all the time because she's got this series, books like, you know, you are a badass at making money, you're a badass at whatever.

They're really good books.

And if you listen to the.

Listen to her on Audible, she, she narrates them and she's funny too, so.

Highly recommend.

Pretty lightweight, but still inspirational.

But she has a phrase.

She says that everything's figureoutable.

And again, the prior life experience.

We had to figure out how to make TV shows in my prior career, how to, how to deliver day and date international Disney releases across the, across the world.

Everything's figureoutable.

And as one tries on a lot of things and whether it's college, whether it's summer jobs, we build confidence so we realize that whatever problems come our way, we can figure it out.

So I was able to bring that into this new career and learn how to be a note investor.

I knew nothing about all these things before.

Yeah.

I don't know any school that actually teaches about note investing.

Correct.

It's a school of hard knocks.

So.

Correct.

But as we talk more about investing, everyone has a core investment philosophy.

If you could describe yours and one or a few sentences, what would yours be?

And where did you, you know, where did it come from?

It came from and it was developed over several reps.

In the beginning, I, and I think some other investors are just so excited to have access to a deal.

Oh, I'm going to do that deal, man.

That's mine.

I'm grabbing it.

And I did okay.

But with reps, I developed more discipline.

And it sounds simple to say, but until I bump into a few walls on my path through this journey of learning and growing as, as an investor, the discipline comes not just from saying no to certain deals, but being more selective about the deals I choose because they lead to the end result that I want.

You know, there's a, there's now a business plan in place for me where there wasn't.

When I was starting out, the business plan was, oh, go make a lot of money and notes.

But now there's a more definitive business plan, and I choose assets and deals and, and paths based on that.

Yeah.

And it's interesting because I was having a call earlier today with an individual who has been, you know, a little frustrated with where they're, where they've, how far they've gotten in the space and asked me for, you know, their, my honest opinion, which I'm never shy to give my honest opinion on things.

And the two things that this individual I gave for some constructive feedback was they're chasing too much in regards to.

They're spending too much time focused on, oh, I need to find more sellers, I need to find more sellers.

And what I told them is, you know, buy a deal from somebody, then just focus on that one person in regards to if they bring you a deal after you.

Somebody brings you a deal and you prove that you can go through the process and close in time in a timely fashion and make that process easy for them, you won't believe how many more deals can come your way.

And when I look at a lot of deal flow that we've gotten, it's really based on those relationships I've built over the years.

And not a lot of them are from newer people, but it's people who have said, oh, I've closed with Chris, let me see if he's interested in this deal, because I know, you know, what he likes and this is his type of deal.

And, you know, he does what he says he's typically going to do.

So, you know, that's one thing that I think, you know, goes to what you said about that, you know, that discipline.

Yeah, absolutely.

And then delivering.

This is what I said I'm going to do and I'm going to do it.

Yep.

You know, and this might actually, you know, the prior question might, you know, be similar to response to this one.

But what's one principle you live by in business that kind of guides how you treat vendors, investors, borrowers, partners, just everyone you work with in this space.

So that.

Yeah, and it is very much connected.

But the word is.

The word is transparency.

Things don't always.

I picked this up in my previous life working in film and television production.

Every day is a controlled chaos, I promise you.

Every day we have a plan and every day things go a little bit off plan.

We have to pivot and we have to figure out how to still make our day or our budget or our delivery date or whatever the case may be.

And investing in business in general is the same.

And if you're transparent with your partners, whether they be your sellers, your investors, your vendors, I find that I move to the top of the list when there's.

When there's another opportunity with those people or they were.

They're recommending me to the next person I'm going to do business with.

We just had a situation where we're doing due diligence on an asset and seller had a valuation on this asset property of now it was about $900,000 valuation.

And we are still in the process of waiting on title and going through everything.

And our BPO came back and it came back like in the low sevens, so it was about $200,000 off.

And, you know, we were very transparent.

We reached back, there's a broker involved in the process as well.

And we sent the BPO to the borrower, to the broker and, and basically said, hey, look, here's the valuation that we're getting, is there?

And instead of just saying, oh, we're, you know, we got to fade, we got to do this because here's our valuation.

We play it of.

Is there another valuation that they have that, you know, they got from somebody that shows their value?

So then we can like kind of review and figure out, okay, who's right and who's wrong.

Because I know if we're at seven in there at nine, there's no agreement that's going to come in place because they're not going to accept the fade that we'd be looking to in that price range.

So trying to figure out.

And they actually were trying to get interior access to the property and do a few things which unfortunately they haven't been able to or were able to.

So for the time, we basically are just like, okay, we'll pause and just pass on it.

But if it comes back around, hey, we're interested in taking a look.

But our numbers, and we looked at it, seem to be more in line compared to the numbers that they had.

But it's again, part of that transparency and, you know, letting people know.

And some people will call that bad news or, you know, some type of conflict, because I get the sense people try to avoid conflict, which only leads to greater conflict down the line because eventually it's going to pop.

Would you agree?

I would agree.

And I'm going to go a little bit deep here for a second.

I always say that entrepreneurship is personal growth, and I hate delivering bad news because I do not like conflict.

And you can ask me about my relationship with my mother if you want to go deeper on that.

I'm telling you entrepreneurship is personal growth.

And I would not have achieved the level of success I have now.

And I won't be able to continue growing unless I continue to kind of look at the things that built me and who I am.

Yeah.

And, you know, that's a great.

I never thought about that, about the personal growth and why look at it for the successes that I've had.

I'm from New England originally, so, you know, and Worked in, you know, construction management with unions and very conflict oriented business.

So when I came into this space I was probably a little rough around the edges and you know, probably a little bit too conflict oriented in creating conflict versus solving problems which I know probably rubbed people the wrong way actually.

I know it did.

And now that I look back, I'm a much calmer, tamer version of myself.

And it's because of growth and maturity really is what, you know, you look at it and even being I'm turning 50 this year, you know, you can always continue to mature, you know, as you, you grow and just from your learning experiences.

So 100% yes.

Oh, you're speaking at Paper Trail Conference.

I like to ask people why was it important for you to be a part of, of this event outside of just knowing how awesome of an individual I am?

Because I know that's probably everyone's number one answer, but outside of that, you know, why is it important to you?

Well, let me think if I can think of a different answer because that was definitely my answer.

No, you are an awesome individual, Chris.

And your style has always attracted the people who want to hear the truth about the business.

You don't.

You said it out loud earlier and everybody who's follows, follows you knows this.

You really don't hold much back and that's not true of everybody in our industry.

Sometimes just the good is shared.

And so for me, first of all, thank you for having these, these individual tracks.

I'm really excited that there's a seller finance track because that's the space I'm in.

But I'm also going to be listening to private lending because I am like ignorant on that.

I'm really excited to go learn about that.

So that's going to be really fun for me.

But I'm gonna, the, the topic I'm gonna be talking about has to do with talking to sellers and you were talking about your process and brokers and fading bids and I'm dealing with, you know, sweet, sweet, you know, 65 year old women in Florida, you know, and they have one note to sell.

That's the only note they've ever created in their life.

My world is different, very different.

And I think that there are a number of people who come into our industry and they're interested in what I do, but they're a little afraid to have those one on one conversations.

So that's what we're going to be talking about.

Talking about the personal growth, honestly, getting the reps in and some tricks and coaching, frankly on how those conversations can be a little bit easier to have.

So I'm excited to share that and.

With speaking on that, people listening to this session, what's one thing you hope that they can learn or think differently or get out of that conversation?

I'm different than some people who.

We'll call it sales training, although it's a little softer than that.

I'm a little different than people who come in with a script or lines or badger the person because you created a note that's terrible and obviously we can't pay much for it.

I just have nice conversations with people and I find not.

It's not for everybody.

I can't close every deal.

Maybe the more aggressive person is going to close that deal that I'm not going to close.

But the people I do work with, it's a nice experience and it's not, believe it or not, I'm an introvert and I found that my way in was just to have conversations with people.

So that's, that's, that's where I'm going to be headed with it.

Okay.

Interesting.

Because you're.

The way you approach these borrowers.

Sellers.

These are the sellers.

I'm sorry, I'm sorry.

The sellers in regards to, you know, having that conversation is interesting because like you said, most people think about, again, on the real estate side trying to either whether you're acquiring the note or, you know, people calling about properties more look at as a transactional process where it sounds like you're more relation again back to that relationship based.

So that's, that's a really interesting philosophy and I know you've been very successful at it, so that must be something that's been working for you.

It works.

It's the only way to work with someone who you can imagine somebody calling and probably go too far into this and I'll try to keep it brief, but calling.

And again, they've only ever created one seller finance note in their life and they've never sold one.

And it deals with money and it's a lot of money.

And they're talking some per.

They're calling some person they found on the Internet who they've never spoken with before.

And if I can spend some time just making them comfortable.

My favorite deals I close are the ones they said, well, we got a quote from someone and it was for a little bit more, but we like you better.

Yeah.

So no, I love those.

Oh, yeah.

Well, yeah, those, those are awesome because it just shows that, you know, it's goes back to that relationship.

And they again felt like they built that relationship with you.

Trust.

No like and trust, you know, that's exactly.

But yeah.

So I know you've worked with a lot of different type of people and investors in the space.

In your opinion, what makes somebody better than somebody?

And again, I don't like using the term better, but if you kind of, you know, put the Michael Jordan on the, you know, mountain of investors, what's a trait that somebody has, in your opinion that makes them excel.

For investors?

Yeah, well, since you mentioned Michael Jordan, I find that most of the deals I do are layups.

And then every now and then I'm at the three point line and I've got a great shot and I go for it or I use the baseball analogy a lot.

We all go for singles and doubles.

A lot of people use that.

And every now and then, even when I don't expect it, that thing just went out of the park that felt good.

And then the next one that looks just like that deal that I think is going to go out of the park too.

I'm lucky to get on base.

It's just how it is.

So patience.

Patience, yeah.

It's one thing that I find a lot of people getting started don't have and I don't know if it's because they've seen somebody who's pushing a certain mantra in the space of it's a get rich quick scheme.

But I always tell people first question I ask them when they say, hey, I want to get involved in note investing, I tell them, I'm like, you realize this is a long play.

This isn't a get rich quick.

This isn't like buying a quick multifamily building that you think you can rehab and add value, add and flip it in a year and make all this money or go build something.

It is slow and steady wins a race where like you mentioned, and we use this analogy a lot, we want to hit the singles and doubles.

We don't want to be the strikeout hitter who hits a home run now and then.

We are the Tony Gwyns of the space where we just want to on base and hit those singles and doubles.

Jay Redding spoke to the Note investing group that I helped to run last night and he talks about his 20 years as an investor.

He was doing flips.

He's done some wholesale deals.

He's buy and hold, obviously notes.

And there's a reason he's been at it for 20 years.

But I think what people don't realize is a 20 years actually goes really quick, but when you start stacking notes on top of notes, it is, it makes a difference.

It really does.

So.

Yeah, then the early payoffs start coming in.

Oh my gosh.

Yeah, there's some, there's some great potential there.

So we kind of talked about it not being a get rich quick business.

Outside of that, what are some mistakes you often see newer investors make and you try to help them avoid?

There's when, when I'm hungry in real life, I tend to gravitate towards bad food decisions.

Yeah.

And when investors are hungry in real life, they tend to gravitate towards bad investment decisions.

We talked about patience earlier.

So it's, it's the same topic.

It's, it's.

You've, you've got to.

One Tracy Z.

Who obviously is part of, of the conference, always talks about you have to kiss a lot of frogs.

Sometimes you just have to kiss a lot of FR to find the ones that are the right ones.

I love that analogy about the food because last night I was starving and the first thing I went was, I'm like, I'm gonna go have a few Doritos.

And was probably the worst thing that I could eat.

But they are really good and with the MSG you can't just have one.

But that is so true because I know of investors who like, you know, get a payoff on a loan and all of a sudden it's like, okay, I gotta go buy something and they just wanna get that money out the door as fast as possible.

Or, or they just started raising money and they got money from an investor and it's like, oh, now I'm just going to go, you know, it's like I can just go buy whatever I want.

And it should be the opposite.

You should actually even take more time and due diligence, make sure you're buying the right assets.

Not something that is going to end up being a nightmare.

And not only that, but stay within your lane.

And what I mean by that is I see a lot of people chasing the shiny object of one day they're a node investor, next day they're investing in crypto, next day they're investing in oil and gas.

Next day they want to go start multifamily, next day they want to do short term rentals.

And you know, it's like they're chasing whatever they see on the news, which you know is not.

Each one of those asset classes I just mentioned is bad.

I'm not knocking those, but just you have to have focused and pick Something you'll be good at.

And I go by the philosophy, I'd rather be great at one thing than an average Joe in 50.

And that's just my fat that's made.

All the difference in my career.

I think, you know, I started by not performing seconds because there were more of them and I found it interesting and then I changed lanes.

But every now and then one of those comes across my desk and I'm like, you know, and I don't do it.

I don't do it because it takes my focus away from what I'm doing.

I should be focusing on it.

It's funny because we had bought probably a year and a half ago a pool of loans and there was like 10 seconds or 15 seconds in that pool that were non performing.

And the seller, literally right before this call, sent me an email, is like, oh, we've got these three pools of seconds that we'd really like you to bid on.

And he knows that I don't like seconds.

It's almost like, you know, going to somebody basically.

Like, I quit drinking a few years ago and I have an occasional drink, but you, it's almost like coming to me, it's like, hey, you want to go for a beer?

It's like, well, you know, I don't do that.

But with these seconds, it's same thing.

It's like sometimes it's tempting because, oh, it's a hundred of them that you can pick up at a good price.

But in the same token, it's like, nope, I'm good.

You know, it's that discipline to say no.

It pulls energy away from other places.

Exactly.

Yep.

And reality is we all like to think we have unlimited energy.

The reality is we don't.

Okay, well, let's kind of roll into.

As we wrap up a little bit of a lightning round that I like to talk about, and first question that I like to pose to people is if you could take one word to describe the current market, how would you describe it?

Exciting.

Ooh, I like that.

I'm going to have to ask you to dive a little bit deeper on that one because that was one I wasn't expecting.

So remember, remember what I do?

I work in a, in a space where higher interest rates and uncertainty can increase the, the inventory of seller finance notes.

And we've seen that over the last several years.

So to me, that's exciting, that's opportunity.

And also uncertainty is just head on a swivel.

Exciting.

So it's, it can play both ways.

Yeah.

And just love to get people's opinions on.

And again, neither one of us are providing advice or we're not, you know, economists or so forth.

But curious where you think interest rates will be heading over the next six to 12 months.

Was in the car earlier today and was listening to someone and I was tending to agree that in 12 to 16 months we'll start to see a drop in interest rates.

And I'm more comfortable predict.

I can't tell you if that's in two months or that's in 14 months but we'll see a drop.

Not significant, but we'll see enough.

Let's hope for the commercial real estate space because that makes a big difference.

Somebody posted on LinkedIn recently, I know they were in lightning round but you understand a one point drop in interest rates for a large scale commercial developer is the difference between a private jet or not.

Yeah, it's huge, Big, big difference.

And I'll just say I kind of agree with you where I think we're kind of going to be floating in this purgatory of rates are going to, you know, go up a little bit, go down a little bit and slowly start making their way down.

I mean someone asked the other day when we think rates will be back in like at 3% and I'm like.

Never, you know, unless we've really messed up again.

Well and that's what I mentioned.

I'm like unless the economy is really in trouble and then your property is probably worth about half the price because the economy would have to really tank and the person's like well if they're at 3%, my house worth three times the amount.

And I'm like, you think that but pro not if interest rates get that low, that's probably not okay.

We are in lightning round and I'm the worst offender of this because I can talk a dog off a meat wagon.

What's one thing you've changed your mind about in the last year?

Funny anecdote.

I, I, I was this links to the earlier conversation headed in the direction of pursuing a buy and hold rental portfolio.

Not one in particular.

Building one.

Yep.

And it sounded like a great idea until I woke up one day and said I'm getting pretty darn good at this note thing and I'm just going to stay focused on that.

And that was a big point of growth.

This connects to a lot in the conversation.

Growth, understanding what I'm my business focus needs to be and where my energy needs to be.

So that was big.

That was earlier this year.

That is big because you kind of get sometimes you see like, oh, there's opportunity or this or that, and it's like again, that shiny object of do I chase it or so great.

And if you know one person, you know, thank for where you are today, your success, who would you want to thank?

Huh?

I posted on LinkedIn recently it was a Mother's Day post, but my mom followed this, My mother followed this career of.

She worked in, she was a newspaper reporter, then she worked in politics and then she worked in the corporate world and then she went off and started her own business.

And my production world was a lot probably like her time in politics.

And then I worked for a corporation.

I didn't care for the corporate part just like she didn't.

And then she became an entrepreneur.

I don't think I would have had the guts or the confidence to become an entrepreneur had she not done it first.

So I thank her for that.

Awesome.

Most people have a lot of thankful things, of course, from their parents or their mother and yours, the entrepreneur side.

That's awesome.

So it's great as we wrap up.

Marco, any final thoughts before we wrap up this episode of the Paper Trail podcast?

This is going to be, this is not a paid sponsorship.

This is me a great conference.

I can, I can, I have really good feelings about the conference.

I already know of several people I'm really excited to connect with there and, and I'm excited to connect with people I haven't met yet with there.

And even like you mentioned earlier, and that was kind of, you know, what we were talking about is, you know, you've got seller financing down, you know, the players in the space and you know, you're one of the leaders in that space and you know, we, we bring in this private lending segment which you know, has some, you know, I'll say some similar characteristics to seller financing in the sense of, you know, sometimes you might originate paper, buy it, but you know little but it's a completely different animal.

But there's people in that space that I know having conversations because we weren't in that space and we've done a little bit in that space.

There's just so much you learn that not only from that side, but you can apply to your current business as well.

And that's where just getting people with similar mindsets but in different asset class of node investing was something that we really wanted to accomplish.

So pretty cool.

It's a good idea.

Well, thanks for coming on today, Marco.

For those listening, make sure to leave us a like share and for more information on the conference.

It's September 18th to 20th in Chandler, Arizona, and you can go to papertrailconference.com thank you all.