Surprises Await New Note Investors! With Andrew Smith

May 18, 2022





How do you manage your notes? Are you still learning how to do it? Surprises await new note investors today! In this episode, we have Andrew Smith, who previously worked as a product manager for software companies, but his life changed when the pandemic and major life transitions occurred. He knew he needed more alternative investments, so he reached out to our hosts by being a guest in this podcast episode. Listen as he shares his humble beginnings and some eye-opening information on note investing.

Listen to the podcast here


Surprises Await New Note Investors! With Andrew Smith

Jamie, how are you?

I’m doing great. How are you doing, Chris?

I’m doing wonderful as always. I usually like to say the sun is shining and the birds are chirping to even get another level. We’re going to talk about some next-level stuff with Andrew Smith, who is joining us. He is an Asset Manager for Labrador Lending, which is owned by no other than Mr. Jamie Bateman. Andrew, how are you?

I’m doing great. I’m glad to be here. I’m a long-time audience, first-time caller.

We typically start each episode with what happened or what’s been going on. Jamie, I will start with you, then Andrew and I’ll go last.

We got a bunch of things going on. We are launching our new fund on June 1st, 2022 so Andrew has been very involved in that. I’m getting set up with AppFolio. I’m laying out our marketing plan for that. As far as asset management goes, we’ve got a couple of deals that we’re exiting through REO getting the properties listed.

Some of the crazy CFDs that I’ve talked about before are 1 in North Carolina and 1 in Michigan. The one in Michigan was the mattress vomiting RVs in her yard. Unfortunately, we’re having to evict her. That’s supposed to take place and then we’ll get that property listed. We’ve already got the one in North Carolina listed. Those are two of my remaining JV deals that I’m hoping to put behind me. Andrew, what else do we have going on? You probably know better than I do.

Mostly getting systems in place and ready for the new fund, preparing all the marketing, the new platform for investors and things like that. Mostly setting up for that new fund and making sure things are lined up with all the assets. That’s about it. That sounds like not a whole lot but there are about 10 to 20 moving parts.

I was going to mention that because in my membership group, Andrew, we did a webinar on asset management and all the systems, tools and everything that goes involved with properly managing. Not only managing but the setup of things as you begin to scale. A lot of people took away from how overwhelming it is because managing 1 or 2 notes is like, “You can do it in Excel,” but once you start getting 10 or 20, it’s a whole different ball game.

One other thing I’m excited about is I got down to three servicers. I don’t have any loans at allied anymore. All of our loans are at BIFI, FCI or Madison. It’s fewer moving parts so I’m excited about that.

For those that don’t know me, I like to be a little competitive. I have been joking with a certain person about racing them in a 5,000. It’s moved to two different people. It’s amazing how your phone listens to you or reads your brain. On my phone popped up this thing called Future.co. It’s fitness training but it’s an actual live person who’s remote who you can hire as a fitness trainer. I learned this from the Morning Brew. If you subscribe to the Morning Brew newsletter, it’s worth it. They had 50% off for 3 months.

It’s $75 a month and you get to work and select your trainer. You fill out this questionnaire, which I went and did. I selected a guy who used to work with the Dodgers. I’ve had knee surgery so I want somebody who was familiar with that and around my age or probably five years younger. He’s in North Carolina. We get on the call and we’re talking. He asked what I do and he heard real estate. His ears perked up.

I said, “I do mortgage notes.” All of a sudden, the conversation turned to my goals working out into mortgage notes because, over the last years, he’s bought 5 to 10 doors down as rentals. He heard about mortgage notes through BiggerPockets. I’m like, “You’ll find that at BiggerPockets.” I mentioned the show and stuff. He googles pod and goes on. He’s like, “This is going to be a good relationship.” I’m like, “I’ll teach you notes. You teach me how to work out and eat healthier.”

I was trying to exercise and work out. I tried the Nike App and these other apps that show you how to do it but I need somebody barking in my ear and pushing me. That drives me more. I figured for $75 to try it out and see if it works. Still great if it doesn’t. It’s the first phone call and how things go. It’s interesting how everything pivoted to full circle to notes and we got another reader for the show, Jamie.

In my previous life, for a brief time, I was a personal trainer. You might not be able to envision that. One of the things I realized after having done it for a while was that it is more about accountability. It’s not like the guy that you’re going to be working with has some secret sauce. I’m sure he knows a lot about not putting it down but it’s not about this workout program or the special exercise that you don’t know about.

If you invest in a well-run fund, it is a passive investment. Click To Tweet

It’s more about accountability. On the same thing, motivating people, holding everybody accountable in the community and having a mentor or somebody to check in with. The same thing is true in notes, real estate or anything. I found that to be the biggest benefit. The biggest indicator of success for most people is they need somebody else to push them and check in with them.

Jamie, I’m a little upset that with what happened, you didn’t mention that you have a new podcast that with your latest guests must have shattered all these records for listens.

I’ve gotten some very positive feedback. Our new podcast is From Adversity to Abundance. We have 3 episodes out and got 3 more recorded. Chris Seveney was episode number three. I’ve gotten some very positive feedback about all three but people enjoyed your episode like how you opened up. It’s not easy to get vulnerable.

Hopefully, people who’ve listened to that can understand a little more about the why behind what drives you but you can study that from other people. For me, it’s more about why do you work so hard? Why do you cherish every day? I’m excited about the podcast. I’ll check the numbers. You were still trailing Mark Owens, which was episode one but the last time I checked, it’s early stuff.

Make a competition out of it.

Maybe that’s why Mark Owens dropped some F-bombs. You said the name of your new podcast. What it’s going to be?

We’re going to do a little rebranding with the Deeds and it’s going to be called Creating Wealth Simplified. We will still be focused a lot on notes but broaden it as well to talk about other aspects of real estate and other investment options for people to create long-term wealth whether you’re going to be active while people discuss things about being active and passive and avenues to invest from that perspective.

Interestingly, you start to broaden out to people outside of the real estate and the passivity side of things to get an understanding of what they look for. Most of us think because we deal in our inner circles with people who are like us, people are expecting these double-digit returns, the high-flying risk of certain types of deals and everything else. We’re far few. We’re the minority in that. Most people prefer it if you can get them mailbox money every month so that they can put trust in you, appreciate you doing the work and them getting some benefit for it.

It goes a long way but because in our Facebook groups all of us are trying to grow and be entrepreneurs, we sometimes forget we’re such a small percent of the population. Go back and look at everyone you went to high school or college with. How many of them are entrepreneurs? How many of them work in W-2 jobs, put money in their 401(k) and realize, “What else can I do?” I have one friend who jokes that he likes to live vicariously through me because of the investing side. He’s starting to invest and doing very well in investing as well. A lot of people don’t have the time to do some of the things that we do, especially with family life.

I had a call with a high school friend who reached out and wanted to chat about notes. Essentially coming in blind, I haven’t talked to this guy in years but I’m pretty sure he’s a successful professional going into this conversation. I don’t know if he wants active, passive or if he understands notes but the point is through this conversation, we covered a ton of ground but it was like to your point, Chris. I was reminded that not everybody even knows there’s such a thing as a self-directed IRA or understands the pros and cons of notes as compared to rental properties or how you can be an active or passive note investor. It is good to step back and get the perspective of the masses.

What we’re going to talk about is surprises awaiting new note investors. We thought we talked to Andrew who’s been patient. A little bit of background context, Andrew reached out to Chris and me to see about working on notes. We’ll let you tell your story, Andrew. I wanted to bring him on because although Andrew hasn’t bought his note himself yet, he’s heavily involved in the day-to-day operations of Labrador Lending and our new fund, The Integrity Income Fund.

Andrew, you’ve probably got a unique perspective different than even Chris’ and mine but different than someone who’s never bought a note or is involved in the business. We’d like to get from you what’s surprised you. What did you expect months ago versus how it is so far before we get into the one-minute overview of who you are and your story?

I’ve been working at software companies as a Product Manager. At the last one I worked at, we delivered an independent or a software dashboard for independent financial advisors to help their customers look at the funds they have and analyze their performance. I was in charge of the alternative investments side of that piece of software.

I saw a lot of hedge funds, private equity, real estate deals and things like that. That led me down the rabbit hole of, “What are these alternative investments?” They’re not correlated to the S&P 500 or publicly traded things. Where do they fit in a smart asset allocation model and things like that? Had a little bit of a life challenge, my wife was diagnosed with late-stage cancer.

The pandemic was bad for everybody but we got a one-year head start on that with chemo, surgery and radiation and then it broke out. I looked at life and wanted to do something different. Instead of designing software, I wanted to be moved to more of the user side, get more involved with alternative investments and listen to the podcast. Chris and Jamie seemed like great note investors. I reached out to them. I’m part of the Labrador Lending team working on the assets we have in the new fund. It’s a pretty exciting space to be a part of. I like it a lot.

GDNI 204 | New Note Investors

New Note Investors: We wanted to move to more of the user side and get more involved with alternative investments.


When we were talking about your resume, I was not looking to hire anybody at the time but I kept coming back to it. I was like, “This guy seems smart. I don’t want to miss this opportunity.” You’re picking it up very quickly so if I’m not careful, you’ll work me out of a job.

I said, “I’ll pay him double. Come on over. I’ll let you train him and learn everything.” It’s like the W-2 world where you can bring somebody young onboard and train them for three years and all of a sudden, they get the phone call for 50% more.

This episode is not going well for me so far.

I’m sticking around for a while. I’m excited about the new integrity income fund that’s coming out in June of 2022.

What’s been one of the biggest surprises to you so far?

Coming from a world of publicly traded investments and brokerage firms where everything is computerized, a lot of us know this but if you buy a publicly traded equity, the brokerage tracks everything. From the cost basis to the distributions, whether they’re reinvested or deposited in your accounts. Any corporate actions like proxy voting are all online, tracked and part of one system.

In note investing, I’ve noticed that there are so many moving parts. They’re in these separate systems. It’s very manual like force-placed insurance if you have that. Sometimes the servicer handles that and sometimes, you have to have your separate policy and track where they’re at or they have homeowners insurance. If you’re doing a loan modification, that’s a very manual process. You have to initiate, track and see where that is. Record all the documentation, whether it’s a land contract or note and mortgage. It’s very manual to initiate that follow-up on that. It’s a pretty manual space that requires a lot of work.

I thought it was the passive mailbox money. You can do a bunch of JVs and then you retire in a year. I thought that’s what it was all along.

If you invest in a well-run fund, it is a passive investment but the people inside the fund are working every day, responding to emails and tracking down things that need to be wrapped up to make sure that capital is preserved and all sorts of rules are met.

One of the challenges that Jamie and I saw was based on what you said. There is so much stuff you can’t automate, moving parts like that. Some are by service and some are not. Some services do A and B. Some do B and C. Some do A and C. That’s where Jamie and I are like, “Enough is enough.” Invest in a servicing company that does A, B and C.

They’re handling force-placed insurance, the taxes, the recording and the loan mods. It’s at least something that, from a management perspective, you can still manage your outsource but everything still has to flow through that service. It’s something that you can get them to do and so much better. You mentioned everything like distributions and stuff gets run through with these other systems. As Jamie and I scaled, Jamie is using AppFolio.

I’ve mentioned this probably on five other podcasts. One of the biggest things you should ask if you’re going to invest with somebody is, “What is your reporting look like from transparency and financial perspective? How do you report financials?” If they can’t show you how they’re paying people, then they’re probably not paying people, especially if you’re doing JV deals.

As you get to the fun level, typically, most people who are raising the money have gotten to a place where they probably are doing a better job. The JV level can be more hit or miss with the investor depending on their experience. That’s one thing at that JV level. Make sure you ask them, “How do you report to me? Send me your financial statement and what you send me.” If they can’t, then don’t invest.

One of the other things I’ve noticed is there is a wide range of abilities to communicate with borrowers. I’m a homeowner. My wife and I are on our 2nd or 3rd primary residence as homeowners. When I get papers from the bank or the insurance company, I proactively and promptly deal with them because this is the roof over my children’s heads. We don’t want to mess that up.

A lot of borrowers are hard to connect with, even if we’re trying to do a good deed like a loan mod to get them out of a land contract and into something where they can build equity. It’s hard to communicate with it. If they’re support programs because of COVID impacts that are giving out dispensing funds at the state level, we’re trying to connect with them to say, “There’s money available to you to help pay your bills.” No response from the email or the paper letter. It’s tough to understand and deal with.

In note investing, you put in the work and you get something for it. Click To Tweet

We all come into this space trying to do good deeds and help people. That’s a big motivator for a lot of people who become note investors, myself included, trying to have that social impact and positive impact. We talked about this in David Garner’s episode. If there’s no communication, it’s like you can’t lead a horse to water. It doesn’t mean you should stop leading horses to water but you can’t make a specific horse drink.

We came across this HAF program, which was a federally funded program that the states are administering for COVID relief for homeowners and even renters as well. Andrew took the ball, ran with it and was very proactive as far as reaching out through the servicer or directly to the borrower depending on the situation. I don’t know have we had any actual positive responses even. We’ve had one borrower say, “I’m filling out the application.” When a lot of states are out of money, it doesn’t mean that it’s all the borrower’s fault. We want to help you here.

Our response rate has been 1 or 2 bites out of 12 or 15 that we’ve tried hard through multiple communication channels to get a hold of. That’s better than a 0% response rate but there’s a lot of money out there. It does vary from state to state for the delivery because it’s a state-administered program with federal money. I was expecting it to be higher. I was hoping for 50% because there’s money to pay your bills and borrowers are behind.

It would be profitable for us as well. The one thing I’ll say about that in general is that’s why these coupon interest rates are 8% to 10%. These are not borrowers like we are. It’s hard to fathom. My mom sent me an article about CFD getting more attention. I replied, “I get it.” At the same time, the article is framed like big bad lenders.

Everyone who owns a CFD is bad and we’re ripping people off. It’s like, “What do you want? Would you want to lend your money to a borrower who has a spotty pay history and poor communication?” It gets to the larger issues of educating people on personal finance and things like that. I’m not necessarily blaming each borrower but our hands are tied.

I’m more nervous that I gave you my Social Security number. You already know I’m a good borrower.

I told you that I already submitted the PPP loan application. I should be getting a second edition on my house here shortly.

One of the things I’ll tag along with that because I know people close to me who appear to be similar to some of the borrowers we work with. When they haven’t been forced, a lot of these borrowers have been living in their homes for a long time. There have been no ramifications on it. At the end of the day, with this money, they make it think like it doesn’t benefit them in any way, shape or form because it’s going to somebody else.

I’m wondering if it’s like, “Why should I do this because I get no benefit,” not realizing it’s paying down your mortgage. Unfortunately, financial education in this country is awful from that perspective. We can provide education on everything but people don’t know how to manage their money. That’s a whole other topic we could go down that rabbit hole for a long time.

Andrew, you pointed out that the high level of it is not as passive as it looks from the outside. There are a lot of manual tasks, processes, lack of borrower communication and maybe personal responsibility or ownership of their situation. Do you have a third one? I’m putting you on the spot.

Those are my two big ones thus far. It’s a little slow moving but that one thing I’ll say is a little slower moving than the public markets. I had a lot to learn coming in. I thought there were a couple of instances where property taxes were unpaid on some of these assets. I was running around with my hair on fire. I was stressed and Jamie is like, “It’s a couple of years before it goes to a tax lien sale.”

I’m like how Chris was a couple of years ago.

It’s not like Netflix where you can lose 30% of the value overnight or something like that or Facebook loses 25% trillion dollars very quickly. The speed is a little different.

We haven’t talked about this but if you wanted to buy your notes, did you have the goal of buying notes?

Yes. I’m still tracking on that path but I want to learn a whole lot more before pulling the trigger.

GDNI 204 | New Note Investors

New Note Investors: Having just one or two assets might mean that those two assets are the ones that are going to foreclosure. So you do need to have a bigger portfolio.


This is how you learn. You’re farther along than somebody who’s taking some courses here and there.

It’s interesting though because as you go through this business the first time, something negative happens or you get a notice from a county that you didn’t mow the lawn and there’s a fine. The first time that happens, you get stressed, get real nervous and stuff. I then get them. It’s like, “Get them and throw them in a pile.” You’ve seen it so many times. I get acclimated to it.

This isn’t an in-depth list but there are only a few bad things. You could get sued or something but if your property burns down and you don’t have insurance, that’s bad. If you try to foreclose and you realize that you don’t have a secured lien or enforceable, it’s not good. You lose the property to tax sale and didn’t realize it. Other than that, there aren’t too many major risk factors.

A lot of those are controllable. The ones I would throw out there that are uncontrollable shake you a little bit. I’ve known people who have had somebody murdered on a property or have borrowers who are in prison for being convicted of murder like my two borrowers. I’m not going to go into stories. Some of that time is that type of stuff like something tragic happens to a family.

To me, that does shake you a little bit. When I manage those situations, it gives them the time, especially if it’s in something where they’re in default. There’s the business side of things but there’s also the human side. Most of us have lost someone close to us. The last thing you want during that time is somebody calling you like, “Where’s your mortgage payment?” Sometimes it’s like, “Tell the servicer to cool the offer in 60 to 90 days.”

Those are typically the stuff that as a business owner can rattle you and is uncontrollable. You’ve also gotten to know the vendors in the space. People probably come in either with rose-colored glasses, heard all the horror stories and are either thinking, “This isn’t as bad as I thought it’d be. They are like what people have said from.” For some of the vendors and we don’t need to name companies, generalize between either legal or servicing. What are some of the things that are based on your time in this space, your opinions or some of the things that you’ve noticed?

There’s a variety of vendors you need to connect with. That’s new and interesting to me. It seems like all of them, except the servicer you created, were an edge case or not their typical customer. For example, some services track unpaid property taxes. It’s mostly for big banks and things like that. They’re not used to dealing with a fund that has a couple of dozen properties.

I was pleasantly surprised with insurance. I’ve had my experiences with homeowners insurance, car insurance and other types of insurance. The force-placed insurance was a vendor doing that. They know what we’re doing because they allow us to get in and out of a policy on an asset pretty quickly. That’s pretty impressive but in a lot of these vendors, the note investor is not their first and foremost customer. You’re an edge case, maybe an afterthought or using their services because they exist but it’s doable. It’s nothing awful but it’s not like Amazon where everything is perfectly made for you to have one click and it shows up at your door. It’s not like that at all.

You’ve been surprised at attorney management, us managing attorneys.

You view attorneys similar to when you’re a kid and your school teacher. They’re awesome and do everything. Like attorneys, they go to college for how many years to get this degree. They might be great attorneys but are they great managers of the files? Attorneys are somebody you have to manage and chase down. One thing also that people don’t realize is the attorney structure. You have the attorneys and paralegals.

It’s by no means a knock on paralegals. They do more work than the attorneys do. That’s more knock on attorneys but a lot of these complaints and everything are done by the paralegals and reviewed by attorneys because they’re all standard template forms. If they got so many of them on their desk they’re doing, especially when things start to open up and they’re understaffed because more people are working from home, you have to stay on top of them and say, “Did we get this complaint filed?”

“What is going on? What is the borrower served? If they’re not served, are there time restrictions where we have to serve them or start over? Do we have to post it in the newspaper?” There’s a lot of that that you have to manage and control. It’s not only, “I sent the file over to the attorney. I can sit back, relax and wait for them to get back to me.” That is not the case.

Not at all. Even though they’re billing you by the hour, you still have to, I don’t want to say micromanage but encourage the process along. You have to ask them what to expect in this particular state based on the condition of these documents and all the other factors that go into their legal analysis. You have to say, “Is this a two-week thing or should I check back with you tomorrow?”

You have to know what to expect and when and then help move the ball along because they have other clients. They’re busy professionals like you. They have other things that pop into their inbox and fires they have to put out. You have to make sure that your fire keeps getting waved in front of their face so they deal with it.

I love the fact that I need to get Andrew to teach me how to speak because he puts it in such a nice, beautiful picture that makes us sound so nice. To me, I’d be like, “It sucks and this and that,” but he like caresses it and makes it very well-spoken compared to me.

Diversification is one of the goals that you should be after. Click To Tweet

Andrew, I’ve got a question. What are some of the things that Labrador Lending does better than Seveney Investments? I was trying to make you feel awkward and Chris like that competitive fire.

With the teamwork and development, Jamie is great. Jamie and I clicked together because we’re both fairly methodical. You’re more like process-driven people. It’s hard for me to compare because I haven’t worked day-to-day with Chris as much. That’s a tough question for me to answer because I don’t think I have enough information.

One of the things that I will say about myself is I do notice. I have weaknesses. I joke with Jamie about that all the time. We’re in NFL free agent period. In 2021, Jamie was doing the draft and bringing people on board and stuff. I’m sitting there like typical Patriots, sitting all by myself like, “I can do this all by myself.” I then realized, “I need to get a little too big and busy losing my edge.” I had the free-agent spending spree. I’m trying to bring Tyreek, Deebo and AJ Brown coming on board in 2022. It’s the thing that Jamie is doing better and we’re going to blow it by himself.

Let’s be honest. I’ve learned a ton from Chris and I still do. There’s a lot out there. Anything else that comes to mind, Andrew, as far as surprises? Are you turned off by note investing? Are there other things you enjoy more than you thought you would?

I enjoy it quite a bit because I feel like you put in the work and get something for it. You get a steady stream of returns and a little more control over your investment outcomes. The diversification benefits are still important like buying stocks or bonds. What I learned from Labrador is having 1 or 2 assets might mean that those 2 assets are the ones that are going to foreclosure. You do need to have a bigger portfolio. Labrador has 27 or 29.

We have 2 in 1 entity, literally 2 loans. They were both purchased as performing either newly originated or reperforming meant for cashflow. Let’s say that those two loans are not producing a ton of cashflow at this point. If you look at only that entity, that would be pretty discouraging or disheartening. Something Chris has taught me is it’s a numbers game or a volume game. You could hit a grand slam with 1 deal but you need to scale to be able to have 2 or 3 deals go South and still be profitable from a portfolio standpoint.

DJ, who’s in our group, would talk about that. He understands that you need some of those performing loans to also bring in some cashflow so you can manage your finances on the ones that are in default a little better. With all these foreclosure costs, it’s nice to have some money also coming in the door and provide some cashflow so you’re not cashflow negative every month.

Things like software are gone as far as subscriptions like the subscription model for everything like Zoom or whatever else you’re paying for. You do whatever system you end up using to manage your notes. It’s usually a monthly payment and it’s like, “I still need to pay that.”

You still need the systems up and running so that you can manage the asset to the endpoint. Even if there is a payout at the very end, you do have to float your daily operating costs.

Andrew, what are your goals over the next months?

Is it 10X to 12X on your portfolio?

10X is the goal. Slow and steady wins the race. Diversification is one of the goals that I’m after with my portfolio and finding something I can be good at, to be honest with you. Also, getting the integrity income fund up and running and raising capital for that. It’s an evergreen fund but we want it to grow and be a productive entity for a lot of investors. I haven’t thought about 36 months but I feel like getting the fund up and running and getting some more diversification in my portfolio. That’s going to take 24 months because I do have 2 kids.

Building the team has been helpful. Initially, one of the mistakes I made was bringing everybody on board and them doing everything. It’s challenging as a small business owner and team leader to be able to delegate. One thing we’ve done well is Sandra is managing the Integrity Mortgage Note Fund that Chris and I run together. She’s doing a lot of that. She’s not focused on anything outside of that.

You’re essentially focused on everything else. That popped into my head. That has helped us. You can help her out and she can help you out but we’ve been able to divide and conquer that way, which has helped us be able to launch the new fund and scale that way. Chris, I feel like you should talk about your new funds since we’ve talked about ours.

We’ve got a new one. I still have to be a little bit hush-hush on certain things from it but we have some stuff that’s coming down the pipeline. I joke about the draft of free agency where we are putting a team together. I got Lauren who’s onboard full-time and one individual who’s starting three-quarter time and another person coming on full-time. We are getting ready to scale and grow. It’s interesting.

GDNI 204 | New Note Investors

New Note Investors: You still need the systems up and running so that you can manage the asset to the end point. Even if there is a payout at the very end. You, you do have to float your daily operating costs.


We could almost have a whole conversation on the dynamics of bringing people on. You do have to bring on people who not only know what the note space is but fit your mentality and style, the culture. I don’t know how anyone can deal with me but so far, Lauren has been able to do it. She’s very cynical. One night, we were going back and forth on something. She dropped two mics on me. I coughed and said, “I’m going to bed.”

Jamie is doing his new podcast. Lauren is going to be the new host coming on board here sometime on June 1st of 2020 when we’re going to be rebranding that show. Jamie, we will still be coming back for some guest appearances. I still want to have that episode where we have Sandra and Lauren imitating both of us. That would be entertaining from that perspective but back to staff, you’ve got 5 people from 4 people working for you.

We’ve got Andrew, Sandra and my middle name is Andrew. For a little bit there, it was only the three of us. I joke that we only hire Andrews. We have two virtual assistants as well, one that’s handling mostly marketing and then we brought Jenna back who’s doing administrative data entry type stuff. I’m full-time plus. No one else is working full-time per se. I’m excited about the team as it is and in the future.

You don’t want to scale too quickly but if you’re going to scale, you’ve got to leverage something that’s not yours like other people’s time, money, both of the above and technology. I’m excited. Andrew has been awesome so far. I wasn’t sure the first if you were going to get scared from all the things we talked about here. It’s more work than it appears on the outside in a lot of ways but we’re getting better at streamlining things.

We’re all working on the systems. Chris, you’ve put out a bunch of great information on how to think about scaling things, streamlining and how to manage time, both your personal time and how to manage the fund’s time. We’re actively working on that and constantly working with our software providers. Jamie found AppFolio. Investors are going to love that because that will be our investor-facing portal where they get everything from fund updates to their K-1s at the end of 2022, looking at what assets are in the fund, managing their distributions to all the things.

I’m trying to think about how I work because I can be guilty of, “React to whatever’s in your inbox.” Most of the day goes by and you’re like, “I didn’t do the big things that I was thinking about.” Balancing that like, “We got to support our teammates and listen to your boss.” We all want to accomplish big chunks of deep work. Balancing that is like real life and any other role.

You’re never done it but we’ve made a lot of progress.

It’s interesting because I got AppFolio. Most people know it from more rental properties and rentals use it but then they came out with a new fun syndication management and Lauren is talking with them. You’ve used them and heard a lot of good things. It’s affordable compared to a lot of other places. They would charge $1,500 to $2,000 where they’re much more economical.

For me, I turn them off the first time because it’s like a three-step dating process with them. They’ll call you up, interview you before they show you the software and call you to screen you again before they show you the software. I don’t have the patience so after the first call, I’m like, “Either show me your software or I’m done.”

Andrew, I shielded you from a little bit of that. I don’t think you saw the whole front end but there’s a process there.

I am glad you shielded me from that. I can show up and deliver my opinion. That’s the easiest job to have. Show up and be an armchair quarterback.

Andrew, final thoughts on this or a good deed?

Go with the nut and bolt first if you’d like. It popped into my head as you were talking, which is how most of these go. We use Loom for our team. Andrew is probably tired of hearing me talk about it. I’m trying to push it. It doesn’t have to be Loom specifically but that software, in particular, is one of the more popular ones out there for this purpose. It’s a screen recording software that is interactive as well. I can do a five-minute video on how to do this or what my thoughts are.

Our virtual marketing assistant put together the calendar, images and posts. I can do a five-minute review of my thoughts on those images and captions. I can get a lot more conveyed in those five minutes versus going back and forth over email or chat like, “Tweak this. Don’t add this semi-colon.” We’ve used Loom quite a bit. I’m trying to push it even more for our team, not only for a particular task but it also helps the whole team see what the other team members are working on.

We’re in three different time zones, one is twelve hours ahead of us so it helps us work together that way and collaborate. If you’re not familiar with Loom, check it out if you have more than one. If it’s only you as a solo note investor, it may not be all that helpful but it does help you to document your processes and collaborate. I’ve found it to be beneficial.

A lot of times that's why things fail because people don't have the time, energy, and support. Click To Tweet

I’ll second that in also working with external vendors because I was typing an email about updating the website. There’s a terrible communication path. I made a little Loom video and said, “Move this section. Take this out.” I feel like it was a pretty great way to communicate something very visual and quickly without too much confusion.

As far as a good deed, we’ll rely on the Homeowner Assistance Fund. Working hard to get in front of the borrowers like, “We know you’re behind but here’s some free money to catch up.” Have conversations with them when one of them replies and says, “I’m working on the application.” Encourage them to say, “Let us know if you need anything. Your servicer is there to help if there are any documents they need to provide.”

Keep the conversation going and encourage them to finish it up because it can be a daunting process. A lot of times, that’s why things fail because people don’t have the time, energy and support. They’re too busy working two jobs to be on some government website uploading photos and documents for hours on end. Encourage them to keep going on that and hopefully, there’s some benefit to them at the end of their line.

I’ve had six people file bankruptcy. Not all of them defaulted. Some of them were performing loans but they essentially looked at their cases and ran up a lot of credit card debt and other types of debt. Be cognizant of making sure you stay on top but there are a lot of people selling the idea of buying distressed debt that’s occupied that has equity and you’re going to turn like, “You’re foreclosed and get all this equity on this property.”

Put yourself in that person’s shoes. I probably have said this 1,000 times on this show. If it’s a $200,000 house and they owe $100,000, more than likely, they’re going to file bankruptcy because of several things. One is the credit’s already shot so they can’t go buy anything. If they try and go rent something, their rent is probably more than a mortgage if someone will even rent to them. They’ve probably been in that house for 10 or 15 years, plus it has equity so why would they give all that up to go live somewhere else?

I foresee a lot of bankruptcies coming down the pipeline because of equity. Interest rates are rising significantly. People’s ability to when they can afford our houses might cause some slight declines in house prices but it’s not just people’s mortgages. Remember people have car payments and credit cards. Some of those might be adjustable.

A lot of this debt that we probably have for borrowers is probably adjustable. With where rates are headed, it can get pretty steep on them. Be cognizant that you’re going to start seeing a lot more notes that are in bankruptcy. Make sure you educate yourself on understanding how to invest on notes that are in bankruptcy.

That’s a huge need in the note space, as far as education goes. What are the differences between Chapter 7 and Chapter 13? Can you foreclose on the loan that’s in bankruptcy?

I had a guy, either in BiggerPockets or one of these sites, trolling me because the person asked the question, “How do I do seller financing on a note and protect myself from being crammed down in bankruptcy?” I commented, “If it’s an owner-occupied first position lien, it can’t be crammed down but in other instances, there’s nothing you can do.” He’s like, “You can cram down a first.” I said, “If it’s owner-occupied, I’m pretty sure you can’t. That’s what every lawyer said.” He’s like, “Tell your overpriced lawyers they’re wrong.”

Me being the type of person I am, I google this guy and find out this person filed a Chapter 11 bankruptcy. On his rental properties, because there was Chapter 11 through his entity, they crammed down some of those loans. I reply. I said, “Are you referring to your Chapter 11 that you filed that crammed it down? In that instance, yes.” He commented, “Do you want to bet $100?” I said, “I don’t bet and stuff but I do listen to my attorneys.” He said, “Your overpriced attorneys?” I’m like, “This isn’t owner-occupied.” He said, “Whoever said anything about owner-occupied? My original post didn’t say anything about me lending on owner-occupied.” I ended up letting it go. These people who troll you and ask for help are craps so be it.

My note and bolt are never to wrestle with a pig because you both get dirty and the pig likes it.

It’s funny though. The way I phrased it was in a way that was more asking questions like, “Educate me. Can you show me a PACER where this exists?” I did take down the comment when I did. I posted it so he could see it about his Chapter 11 because I want to take that load jab but I took it down because I don’t have time to deal with people trolling. I’ll answer people’s questions but if they want to come back sarcastically, I may go 1 or 2 rounds with them and stuff like that but after that, I’m like, “I don’t care.”

Andrew Smith, thank you for joining us. This has been awesome. If I gave you too much time, you would stress about it so I’m glad I only gave you an hour.

How do people reach out to you, Andrew?


Any other like LinkedIn?

I’m on LinkedIn. I’m @SmithXYZ on LinkedIn. It’s hard to find Andrew Smith and all the first 23 letters of the alphabet are all used up.

I don’t think we said it but you’re down in the Orlando area?

I’m based out of the Northeast suburbs of Orlando, Florida. I’m in the same time zone as Jamie so that makes the collaboration easy down in sunny Florida. Thanks for having me.

Thank you, Chris. Thank you to our audience for spending your most valuable resource, which is your time. We appreciate it. Please give us positive ratings and reviews. Take care of everyone. Go out and do some good deeds.


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About Andrew Smith

Andrew has 20 years of experience of developing technology as both an engineer and a product manager. He recently comes to Labrador Lending after leading software teams at Citibank and SS&C Advent. His passion for investing brought him to the team in 2022 to help with daily operations and asset management.

Andrew joined Labrador Lending in 2022 and works with Jamie to support the growth and success of the fund. He supports the daily management of notes, prepares investor updates, and assists with the internal technology tools of the fund. His passions outside of real estate investing include spending time with his family, attempting to master the kettlebell and going to the beach.

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