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Getting Rid Of The Fear: Lessons From A Real Live Real Estate Investor With Anna Scheller

 

A lot of people are held back from doing what they love doing or pursuing their passions because of fear. Sometimes, it’s the fear of uncertainty, of change, or failure. For business owner and real estate investor Anna Scheller, it was the fear of objection and stepping out to do something she wasn’t sure she could pull off. Anna leads the corporate housing industry in South Central Texas. On today’s show, she chats with Moneeka Sawyer about how she overcame her fear which led to opening up more doors for her corporate housing company. Don’t miss these golden nuggets from a real live real estate investor!

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Listen to the podcast here

 

Getting Rid Of The Fear: Lessons From A Real Live Real Estate Investor With Anna Scheller

Real Estate Investing For Women

I am excited to welcome into the show my friend, Anna Scheller. Anna is an award-winning podcaster, speaker and TV show host. She coaches entrepreneurs to develop strategies that result in more sales for their businesses while creating profit for future growth. She began her business career as a real estate investor, which is why she’s on the show, and has learned many lessons as a result. She is the Executive Member and Founder of Capri Temporary Housing, and still actively invests in real estate, albeit with more experience. She co-hosts the Black Belt Selling with her daughter Stephanie and has her own show, Sales Mastery, which airs on iTunes and Roku TV. Why Black Belt Selling? Anna just achieved her fourth-degree black belt in Taekwondo at the age of 58. Anna is the mother of seven children, is married to Phillip Scheller, and they live in Del Rio, Texas. Anna, welcome to the show.

Moneeka, I’m looking forward to being on your show. Thank you so much for inviting me.

It’s my pleasure. This is going to be fun. You and I have only talked about investing. Tell us a little bit about this other company that you’re running.

It came out of the real estate investing situation. It could be a very long story, but the short version is we started buying properties and we ended up with a fourplex in the midst of all of that. Someone had come to me when we had the fourplex and said, “What would you charge me to furnish it?” I gave him the price and he goes, “No, I can do it for cheaper, but I still want to rent from you,” which sparked the idea of, “I wonder if there’s a market for this.” In that fourplex, as people started to leave, I set up one apartment for furnished, just furnishing it. I can go into more detail later about how that ended up working out, but that started the temporary housing business. We hit a place where we were doing extremely well and we rapidly grew.

We went from 8 units up to 30 units in a space of three months, which is rapid growth. It was hard and difficult. I wasn’t prepared for it. Hence, some of the fun little mistakes I made. What ended up happening when that market changed, because it was very much government-driven and there was a change in administration, that market dried up. The problem was I didn’t know how to find more people who needed what I was providing. That sent me on a search to figure out what I needed to do. I had very little marketing experience. I didn’t have any sales training. I felt very lost. The following year, I ended up getting sales training and discovered that I was afraid of objections, which was what was holding me back.

Corporate housing is a pricey item. I was afraid that people would say, “That’s too expensive,” or they would personally attack your price kind of situation. When I was going through that training, using that training opened up more doors for the corporate housing company. I was so excited about the training. I started telling people how to sell and my trainer at the time, Eric Lofholm, invited me to become one of his trainers and sell his program. That’s how I ended up in sales training. My daughter came on board. She went through his program, and then she and I started the podcast Black Belt Selling. Everything’s morphed to where I am doing both. I am doing the coaching and the podcasting, as well as the corporate housing.

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They work well together. I stay in the sales training space because like everybody, I need to be reminded of the things I should be doing. You can get so complacent to where you get a flood of people coming in and you think that’s going to be your bread and butter for a while. Suddenly, you’re not working on your sales process. Before you know it, you don’t have any more clients. That’s whether you’re a real estate investor, whether you are renting properties or whatever you’re doing.

I think that’s true. Our place where we need real reminders is a great place to focus even a portion of our daily work. I grew up in a place where I was bullied, tormented, and became a very depressed person. Bliss has been my journey my whole life. Part of why I continue to focus on it is for that daily reminder that this is important for me. I need to continue to work my skills. I’m a blissful person now. There are times when I fall off the wagon and I stopped doing my practices. I realized that I’m not as happy and not as blissful as I normally am when it continues to be a part of the things that I’m focusing on through my day. This show helps me to keep that focus so that I can stay more blissful. This show serves me in many ways. I love that it serves many women, but part of it is that it reminds me of what’s important for me too and keeps me focused on that. I totally get that.

I was sharing with you a story that was a costly story. Thankfully, not as costly as it could have been. As I was getting ready for the podcast, I kept thinking to myself, “I’m doing this for the good of my family. I’m doing this because it’s fun.” The situation’s not fun, but there’s bliss to be found. There’s joy to be found even in that situation. The fact that I only lost $500 and not $2,100. Those are the kinds of things where I thought, there’s real truth in choosing to be joyful because stuff’s going to happen every day. Are you going to let it pull you down or are you going to look at it, see the lesson you can pull from it, and move forward? That is also a journey that I’ve had to take through my investing years as well.

I love how you say that because it is a choice. My book is called Choose Bliss. It doesn’t mean that challenges don’t come up. It doesn’t mean that you don’t have bad days. It doesn’t mean that you don’t fall off the wagon. It doesn’t mean that you get depressed or angry or whatever. Life is still happening, but if your focus is on living a blissful life and that’s your priority, then you develop the skills to continue to come back to that place. Over time, as you practice, it gets easier and easier. It becomes your default. You are able to rise back to that so much more blissfully and easily rather than it being work. When life tries to pull you down, you’re able to pull yourself back up and the people you love also. Thank you for that. Let’s back up a little bit. Talk to us about how you got started.

It’s one of those funny, merry stories if I might say so. A friend of my husband’s and mine gave us this book and said, “You guys need to read it.” My husband wasn’t into that stuff. I was probably 6 or 7 months pregnant with our seventh child. I bought the book and started reading it in bed. We had been investing in other things. We had invested in mortgage securities. We had that situation going. My husband was looking at how he could do the stock market. Investing wasn’t something new, particularly to him. He would come to me and say, “What do you think about this?” I didn’t know squat. I was thinking, “You’re the smart one. Make a decision.” I let him pretty much make most of the decisions. I’m reading this book. We’ve never invested in real estate.

We bought a couple of homes. We have about three homes and we’d never invested in real estate beyond our own homestead. Rich Dad Poor Dad talks about the absolute benefit of real estate investing. We’re both in bed reading our separate books and I’ve got a little bit of a belly and I’ve got a kid kicking me in the meantime. I’m reading this book and I said, “What do you think about real estate investing, honey?” He goes, “It’s too risky.” I go, “Okay.” I put the book down. I continued to read the book, but now I’m thinking. I don’t remember saying anything to him about it again. Two years later, he picks up the book and in picking up the book, he goes over to me. We’re reading our books. Our baby now is two years old. He looked at me and he goes, “What do you think about investing in real estate?” “I think that’s a great idea.”

We actively started looking for real estate. Robert Kiyosaki at that time had a real estate investing school seminar type of thing. It was a three-day event in Scottsdale. We paid all the money. I think we spent about $15,000 by the fees and then staying in the posh hotel and eating out and doing all these things that we were like, “This will be cool to make this happen.” Right after that, I had spotted a property. By what I do now, I wouldn’t say it was a bargain back then, but to us, it was a bargain. We invested in that property. That was a three-bedroom, two-bath house with a two-car garage. We still own that property now.

 

I’ll be honest with you, it has probably been the steadiest rental property we’ve ever owned. As a matter of fact, I was talking to my husband about selling it so we could pull the equity out and start investing in bigger things. He’s like, “Why would we do that? We make so much money.” I’m laughing going, “There’s so much more money to be made. Stop it.” That’s how we got into real estate investing. That was probably our biggest success story. We bought the house for $95,000. If I sold it now, I could sell it for easily $160,000. We’ve owned it for about sixteen years.

You started getting into multifamily. Tell us a little bit about that journey.

All of the books tell you, you should get a mentor. We got a mentor and I spotted this fourplex, but I wasn’t ready to step out. I was looking at single-family homes. By this point, we had picked up two more single-family homes by the time we saw this quad. I mentioned it to the mentor and the mentor said, “Go for it. You need to get it.” I’m like, “No. I don’t think so.” He took us through the steps to start negotiating for the property. This property was not a great bargain, but the potential cashflow is good. What ended up happening was by the time we got around to putting the offer in, another offer had gone in. We were the backup. We were encouraged by the realtor to put in the offer. I guess realtors must talk. She said, “This one looks shaky. It looks like they’re not going to be able to pull this off.” Sure enough, their offer fell through and ours came up on the table next.

Up until this point too, we’d also done some spec homes. We built some homes and sold them. We had a little bit of cash. We also had some prop land that we had purchased. Our portfolio for beginners, we were doing okay. We ended up with this fourplex and that was our first fourplex. We went on to pick up another fourplex maybe a couple of years later when we were able to start getting the furnished housing underway. We picked up a couple of duplexes. We’ve since sold all of those properties. I’ll share some of our fun little mistakes in that. The thing that we did was we took the steps anyway. I’ll be honest, I was scared. I was afraid of stepping out and doing something that I wasn’t sure I could pull off because I knew my own tendency to drawback when I was talking to people. I knew my tendency to let people go when they offered objections to renting from us. It was too high. It was this, it was that. I was scared and yet it turned out to be a big turning point in our business. It was there that opened up to us the corporate housing, which is the ongoing business that we have now. If it wasn’t for that, I would not be doing what I’m doing.

Tell us a little bit about the evolution and some of the mistakes that you made. I’m not trying to put you on the spot, but I want the ladies to know that mistakes happen and it’s okay. We can do things in spite of our fear and be successful. We can make mistakes and be successful. I’ve had people in the show that built a business, lost everything in the 2008 crash and have built multimillion-dollar businesses since then. Part of what you and I had talked about before is that there was a lot of these moments of fear that you had to step through.

There were a lot of mistakes that you made that you had to say, “I need to learn from this and move on instead of giving up.” The thing is that if you make a mistake and you stop, then you stopped at the mistake. It’s counterintuitive. If you make a mistake and you move, then you didn’t stop at the mistake. Now you get to experience success. This is one of those things that you’ve done very well. Not that you’ve made a lot of mistakes, but when you make the mistakes, you’re able to move through it. That’s the conversation that I’m interested in having.

You can't always pick the people who are going to be supportive and help you through a mistake. Share on X

I was so eager to buy the property. I think this is very common among early investors. I was eager to start scooping up the property. I would drive-by something and I’d go, “I think we should get that.” My poor husband, I was driving him crazy. There was this one I did. There was this one property that was being sold by a pastor and his wife. They’d moved on and they were trying to sell it. At the time it was $96,000, but for us to buy it was going to cost us. It wasn’t even the normal cost. We were going to have to pull money from somewhere else to do this and that. We paid to sell the property to us.

I can’t remember how it worked, but I remember my husband thinking, “You’re screwing up, Anna.” I’m like, “No. It’s all going to work out.” We had that property and sold that in 2020. We purchased it in 2007 and that property ended up becoming a money pit. The mistakes I made to the property were number one, I didn’t sit down and I didn’t look at what was a realistic rent that we could get for that property. We weren’t looking at it as a flip. We were looking at it as a rental. There are two ways to invest in real estate. One is that you can do the buy and hold. You turn it, you flip it, you buy something needs repairing or has cosmetic issues. You turn it around and then you sell it for profit.

This particular property, I didn’t do good due diligence. I tried to force my husband into taking it because I wanted it that bad. Initially, we were able to get a good rent on it, but because I wasn’t conscious of the location, I wasn’t conscious of what other rents in that area would be. It got to the point that I was starting to get desperate for tenants. Often, I rented the property out at the cost of the mortgage insurance and taxes. If something went wrong with the property, there was no money there. When things would go wrong, I’d have to take money from other properties to take care of this one.

Ultimately in the end, with the last tenants we had, we’re always paying their rent. I should have kicked them out months before we finally were able to move them. It turned out that the property had so many problems. We were expecting a $30,000 profit. I think we ended up with $15,000, which is still good. I’m not complaining, but here’s the thing. I didn’t judge character well because I allowed my desperation to make sure that the property was filled. I compromised a lot of the things that I shouldn’t have. I compromised making sure that the tenants had good background. I compromised with the rents and it ended up being a huge other valuable lessons that I’m taking with me now as I do more investing and work to grow our portfolio some more. When you look at that, especially if you have a disagreement with a spouse or a significant other, that can erode your confidence at recovering from a mistake.

If I can encourage your readers, here’s the thing to keep in mind is that you can’t always pick the people who are going to be supportive and help you through a mistake. I hope you can. If you can’t, then we’ll be talking about practices that can help you. The bottom line is that when you fail, you have to get up and you have to keep moving forward. Yes, that property was a problem. I may get another problem property. If I do, I will handle it differently, but we’re moving forward. You make a mistake, you dust yourself off. That’s where mentors and support system come in. You get people around you who can help you go back to the experience. See where things could have been done better, could have been maybe smoother or you could have avoided certain mistakes. You implement those things the next time around. Quitting doesn’t give you the opportunity to try again. Surround yourself with people who are going to help you analyze what you need to do different so that you can pick yourself up and start over again.

Were there any decisions that you regret?

There’s a lot. I’m sure I’ve made a lot of poor decisions that other people have made. With the corporate housing business, we learned about a model where we could grow our inventory quickly without having to go through the process of purchasing. We did a lot of subleasing and that’s still part of our model. It’s a great model. However, the challenge that I ran into was that I was so excited with this. Remember I said earlier that that business grew and multiplied rapidly? I didn’t have the infrastructure in place to manage the funds. You’ve heard the saying, “Easy come, easy go.” That’s what happened. I didn’t have the experience and I didn’t have a team helping me to manage the situation. I can’t tell you how many thousands of dollars I have lost from not working with a team.

 

One such situation that happened was that when the market was booming, we had the Eagle Ford Shale, the fracking that was going on here in South Texas. What I did is I took out a number of apartments expecting to fill them. Saudi said, “We’re not going to have any of this,” and they glutted the market with oil. Overnight, those jobs disappeared. Overnight, my market disappeared, but I had all this inventory that I had taken out to satisfy a need that was no longer there. I would sit here in this office and I would weep because I didn’t know how I was going to solve this problem. My husband was upset. He didn’t help. He was trying to be supportive and understand, but he was also scared.

He wasn’t as involved in the business as I am still. I use him a lot for bouncing decisions off of him now. Back then, all I kept seeing was $10,000 draining out of my already impoverished bank account. I decided I wasn’t going to break those leases because breaking leases usually ends up costing you three months of rent. Why not keep the leases and at least try to get them filled, even if it was at cost? That was a three-month period of a lot of misery and pain. That is a decision I terribly regret, but I was working with a guy at the time and he said, “I want you to know, Anna, no matter what happens in your business, you’re still valuable.”

I felt so inadequate. I felt so foolish. I felt like my value was what was in my bank account. This guy helped me to realize that I brought the value in and that the bank account would recover. I had to borrow money. I had to take funds. I had to do things that I’ve told myself I would never do. It wasn’t illegal. No cartels. Taking out inventory, not staying in tune with the culture to know what was coming down. There are two things that are good news. One, there was another company that did the exact same thing, except they were bigger. They were losing more money than I was. I wasn’t the only one.

Second is that it became an extremely valuable lesson. It was a lesson in humility to realize that I was subject to making decisions that had consequences I didn’t want to deal with. I think that’s also a life lesson because the more you do, the more mistakes you’re liable to make. You have to accept the fact that those mistakes are going to come. While you want to mitigate loss to the very best you can, you have to go out and you have to keep doing what you’re doing. I’m successful now because I didn’t quit. I’m successful now because I found the means to take care of the problems. My credit score suffered for a while there, and that’s something I’m still recovering from. On the other hand, we’re still standing and we now have multiple opportunities in front of us to grow our business. Would that have happened if I quit? Absolutely not.

Tell us about your biggest triumph.

It was in adopting that business model that helped me grow the company because that has been something that has helped me throughout my years. Another big triumph is I hired a consulting team that I’m working with right now, helping me to grow the business. Those two things plus having seven kids.

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Do you mind giving us a little bit of what’s that business model that you adopted?

It’s the whole idea of subleasing. Your client leases the same way you’re leasing. For example, you go into an apartment community. Let’s say I have somebody that comes to me and they have a team of ten people that they need to house. We researched partner communities in the location that can do that work. Depending on the requirements, we’ll find how we can get that many people. If they want to double bunk them, if they want to give them each their own apartment. We look to see what’s available. The other thing you have to do is there’s several pieces to it. One is you have to arrange for furniture rental or purchase the furniture yourself. I’m bringing in linens, housewares, and all of that good stuff because essentially you want to set it up like a fully furnished and full service house.

You set up the electrics, the cable, the utilities, everything, and then you put that together. You figure out how much money you need to make on top of that for your company and yourself. You present that to the client and they have a decision to make. I like working with companies because they understand the value. Working with individuals is a little tougher because a lot of times, they’re trying to save money over a hotel. We’re often comparable to a hotel in terms of price, but we’re not always saving the money because what we offer is so much more space. We can do a lot of things price-wise comparable to a hotel. That’s the model. You go in and you sublease. You set everything up and then you’re managing it for your client, whether it’s a company or an individual.

You go in and you lease something first and then you sublease that to your client. Is that what you’re doing?

Correct.

You don’t own the properties?

Not all of them. I had some that I owned like those fourplexes. Those were all set up fully furnished apartments. We sold them as fully furnished, which was able to get us good profit on the sale of the property. We also created a little bit of competition here for us, but because we’re so unique and we’re so specialized, I don’t worry about that. The Airbnbs don’t frighten me.

 

I know in EXTRA, we’re going to do a deeper dive. We’re going to talk a little bit about how you were sabotaging yourself and what you learned about that. We’re also going to talk about a scary time when you were losing $10,000 a month and how you pulled yourself out of that. That’s what we’re going to cover int EXTRA. I’m excited about that conversation because I know there have been many people that have been through it. First of all, frequently we self-sabotage because of our own fears. The other piece is I know most real estate investors have been through a time where they were like, “How am I going to make it?” I’m excited to hear your story about what happened around that. Could you tell everybody how they can reach you, Anna?

If you want to get in touch with me personally, I would go to my AnnaScheller.com website. I’m still very active in the sales training space. I would love to have a conversation with you about how you’re approaching your investing because everything is a sale. You can go there and you can download my ten sales tips on how to close more sales. You can also get on my calendar. We can have a fun conversation and I can learn more about you and possibly learn more about me. There’s always a lot to learn, isn’t there? Go to AnnaScheller.com. Go ahead and download that. It’ll pop right up for you. I follow all the little guru rules about doing that stuff, but I would love to have a conversation with your readers and see how I might be able to help them close more sales, make more deals because sales is all about the deal and I love the deal and you will too.

Thank you so much for that. Thank you for the free gift. Are you ready for our three rapid-fire questions?

I’m ready.

Anna, tell us one super tip on getting started investing in real estate.

Do it anyway. You’re going to be scared. Just do it. Take the time to make sure that you can, but here’s the thing. This is something I’m being encouraged to do. Don’t be afraid to put out multiple offers. Here’s why. You can make sure that you’ve got conditions to where you don’t have to follow through if something doesn’t happen. If you wait for all the conditions to be right, then you’re going to limit what you can do in the marketplace. Whether you’re putting out 1, 2 or 10 offers a week, go ahead and do it because the means to accomplish it will come as you move forward.

What is one strategy on being successful in real estate investing?

I think one of the most successful things I did was starting to take care of myself. It can be so urgent that you’re so busy taking care of this and that, and doing all this stuff that at the end of the day, your mind is spinning. What happens is you can work that way for a little while, but you have to take the time to get your exercise, get your sleep, have your meditation, quiet time, however you spend that time. Eat properly and make sure that you’re taking care of yourself and your family because in the end, they’re the ones you’re serving, not the person who’s going to buy the real estate or not the renter who’s going to rent it. Ultimately, it’s for the personal goals that you have. You’re going to be a better investor if you are taking care of yourself, and stepping back when you need to and breathing. Take care of yourself. That’s the most important person you have that’s going to run the deals and meet your goals, whether things go well or things require some creative problem-solving thinking.

That leads us into the next question which is, what is one specific daily practice that you do that contributes to your personal success?

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I would say that it is my quiet time. It’s a place to pray and to ask God for wisdom. When I feel like things are spinning out of control, God is always so faithful to help me if I will take the time to speak to Him, to read His word. Those are the things that I think the most paramount to my success because He promises never to leave me or forsake me. The ultimate mentor and support system is God Himself. There are other things I do, but that’s the bedrock of my life.

Thank you so much for sharing that.

You’re welcome.

This has been wonderful. I can’t wait until we chat more in EXTRA. In EXTRA, we’re going to be talking about how Anna got through a tough time where she was losing $10,000 a month and what she did to pull out of that. Also, what you learned about how she was self-sabotaging her own business and how she pulled herself out of that too. We’re going to be talking about that at EXTRA. If you are already subscribed, we’ve got a lot more for you. If you’re not, but you would like to be, go to RealEstateInvestingForWomenExtra.com. You get the first seven days for free. You can get this EXTRA and as many as you can in the first seven days for free, and then you can decide. If it’s for you, you stay subscribed. If it’s not, nothing lost. You get a lot of juicy content. Thank you so much for joining us for this portion of the show. I look forward to seeing you next time. Until then, always remember, goals without action are just dreams. Get out there, take action and create the life your heart deeply desires. I’ll see you soon.

 

Important Links

• Capri Temporary Housing
• Black Belt Selling
• Sales Mastery
• Choose Bliss
• Rich Dad Poor Dad
• AnnaScheller.com

Special Code: moneeka

 

About Anna Scheller

I am a dynamic Keynote Speaker with a heart to help people create more sales. As an educator for over 20 years, I have the skills to provide learning in a fresh and engaging perspective.

I have a unique style that combines sales with training. As a 3rd degree black belt in TaeKwonDo, I combine the black belt mindset with sales training to provide engaging and thought-provoking training.

Every month I lead a free sales training workshop and I attend regular keynote speaker events to help sales professionals expand their network and practice sales skills in a safe environment. My passion as a sales trainer is to empower people to elevate their results and realize their significant contribution to life. Among others, I have spoken to dealerships, financial institutions, as well as leadership classes for the local Chamber of Commerce. I am currently conducting sales training workshops for the Small Business Development Centre for Rio Grande College along the Texas-Mexico Border, as well as conducting webinars for clients all over the world. My passion is fueled by experiencing the change in my own businesses as a result of investment in professional sales training. In one year, I increased the revenues in my corporate housing business 50% and doubled the volume in my network marketing business. I am available for free motivational talks to any size organization.

 

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Pushing Through Mistakes And Having Control Over Your Success With Anna Scheller

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Passively Investing In Notes For High Returns With Scott Carson

 

Everybody seems to be in the note space already. Investing in notes can be a great way to diversify. Joining Moneeka Sawyer on today’s show is “The Note Guy” Scott Carson. Scott is the host of the popular Note Closers Show podcast and a nationally syndicated radio host with millions of listeners each month. An active real estate investor and entrepreneur since 2002, he is focused on the niche of distressed mortgage and notes industry. Tune in to this episode to learn how you, like Scott, can also passively invest in notes for high returns.

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Listen to the podcast here

 

Passively Investing In Notes For High Returns With Scott Carson

I am so excited to welcome to the show. Scott Carson also known as The Note Guy. He is the host of the popular The Note Closers Show Podcast, a nationally syndicated radio host with millions of listeners each month. He has been an active real estate investor and entrepreneur since 2002, focused on the niche of distressed mortgage and notes industry since 2008. He has been helping real estate investors and entrepreneurs create wealth through his teachings and strategies. He is a highly sought after as a speaker and podcast guest with hundreds of speaking appearances at conferences, real estate clubs and networking events across the country. He has also been featured in many media outlets, including, but not limited to, Investor’s Business Daily, The Wall Street Journal, and Inc.com. He spends his free time traveling to new places and making memories. He calls Austin, Texas home. Scott, welcome to the show.

Moneeka, I’m honored to be here. It’s about damn time you and I meet.

Scott and I had so many communities and friends in common and we haven’t met and we don’t know why. I’m so delighted that we’re finally doing this.

I’m honored to be here and I’m glad to help your network and your audience out in any way I can for you. I’m here to serve.

Scott, could you give us the two-minute version of your story and what brought you to where you are?

I started off as a deadbeat borrower. As many real estate investors out of college, I was working, making good money, six figures. I married my college sweetheart. We bought our first house. We decided that based on the knowledge that we knew, which wasn’t much, but growing up in a small town and working in a hardware store with my family and watching HGTVs Flip This House and with the market being where it was, we bought a couple of investment properties to be the landlord. Unfortunately, the market went south in Austin here with Dell Computers and layoffs. We very rapidly became distressed owners because I also in turn got laid off. We’re trying to make six mortgage payments, three first, three seconds on a private school teacher’s salary. That’s not a good time.

Fortunately for us, we’re able to get rid of the investment properties to keep our primary house. I licked my wounds for a little bit. I was back in the finance industry a few years later. A buddy of mine approached me to start a mortgage company that was traveling the country, speaking to real estate investors and teaching proper investment strategies all across the country. I said, “Let’s do that.” I did that for four years. I ran a mortgage company and helped so many investors that way. When the market turned south in 2008, I was very fortunate that one of the sponsors of the mortgage company was very active in creative owner financing and creative financing strategy.

For those four years, I got to soak in a lot of information like an apprentice. When the market turned south, I sold my half of the mortgage company for $1 and started buying debt by dialing for dollars and calling banks and lending institutions to try to buy their debt for a fraction of what was going on, especially during 2008, ‘09 and ‘10. For the past few years, that’s all I focused on, buying debt. As I’d like to say, we are trying to keep people in their homes if we can and working to make America great again one defaulted borrower at a time. I’ve bought over $500 million in distressed debt on residential and commercial properties.

The biggest joy though, and I know you have this too, is we’ve helped a lot of people dive into this niche and change their lives through setting up performing loans and cashflow because I know that’s such a huge passion for you and where you come from and your readers out there. The biggest enjoyment I get not only helping somebody stay in their house when their dream has turned into a nightmare, either divorced or death or lay off or the Corona pandemic or who knows what’s going on. We help them stay in their house but then also we are helping other investors who maybe struggled or found themselves in a hole. I help give them the handout of that hole to find it a true win-win scenario that makes sense for a lot of people out there. That’s why I’m called The Note Guy.

I love that because I think it’s great for the investors, but if we’re working for the owners of the homes too, that’s such a great marriage of intent and opportunity, right?

It is. I would love to say that we could modify or keep everybody in their homes. Unfortunately, that’s not the case. We’re able to do that about 60% of the time by buying their debt at a discount and trying to work with the homeowners in some kind of fashion. People sometimes just bury their heads in the ground like an ostrich or they don’t want to work with a bank. When I buy the debt, I become a bank. I’ve got plenty of options to keep them in their house if they want to, but if they won’t work with me, then there’s not much I can do. I’m always surprised that people have moved out of their house. They left their house vacant and I’m like, “Why? The bank wasn’t going to foreclose on you then. You could have stayed in and kept the house at the date and not gone pay rent somewhere.” It’s sad that we live in such a financially illiterate society for the most part.

It’s amazing when I saw the level of pain that there was in 2008. Certainly, there were people out there that didn’t have a choice. Most of the people that walked away from their homes had a lot of choices and it’s too bad that they didn’t understand that. It’s nice to have people out there educating like you and me. People that are talking about it so that as the market changes because it always cycles. It’s up and down. It’s always that way. There are going to be cycles. There’s going to be hard times. The more educated people are, the more able they are to weather those storms.

Most banks aren’t going to tell the borrowers our options and I want them to have options. I’m going, “If you want to stay, let’s work something out that makes sense. If you don’t want to stay, do you have somebody you want to sell this to? Do you have somebody to take over the payments? Do you want to walk away? What do you get to do? You’ve got to do something. You no pay, you no stay. Let’s figure something out that can be not so confrontational.” I don’t want to foreclose, but if I’ve got to get my attorneys involved, I will. It’s that most people don’t realize that there are options.

It's just sad that we live in such a financially illiterate society for the most part. Share on X

We’re seeing a lot of that right now as if we’ve come out of this pandemic and seen a lot of things happening with people being laid off from businesses closing and things like that. I’m expecting us to be very busy here as we get into the end of 2020, into 2021. There’s going to be a lot of people that are hurting that isn’t going back to work that has not able to pay their taxes on their houses or their mortgages and trying to figure out a way to stay. We expect to be busy, not only on the residential side but also on the commercial side. We’re trying to keep trying to help borrowers out as best we can.

Let’s deep dive go into what is a note. What is it that you do to make this happen?

Everybody is in the note space already. They just don’t know this. If you got a car payment, a house payment, student loan debt, credit card, whatever it might be, if you’re paying on loan, an IOU to your Uncle Tony, you’re in the note space. You’re just on the wrong side of the payment stream. You got it going out, we want it coming in. We all want the cashflow coming in. What we do when we buy distressed debt or distressed mortgages is we’re buying a mortgage from a bank, primarily first liens on residential or commercial properties. A distressed loan is somebody who’s not paid their mortgage at least 90 days or greater. They’ve been out of work, gone through a divorce, sickness and health, or whatever it might be. They’ve stopped paying.

The banks often want them to bring the full 3, 4, 5, 6 months to the table. Most people don’t have that. Most people have less than one month’s paycheck in the savings account. The banks, when somebody starts to get longer and further behind their mortgage, they’re often willing to sell that debt off to investment firms, other banks, and other institutions like my company. We’ll come in and review those assets, that list of nonperforming notes across the country. We’ll cherry-pick those or buy a bulk package for a sizable discount off of the owed amount. We step into the bank’s shoes and have the same rights to the bank. We’ll reach out to the borrower and try to say, “What happened? Tell me your country Western song. This is your get out of jail card.”

It’s like a real-world monopoly for the most part. “I know you were months behind. Can you start making your existing payment? If we take the six months and put it on, do a forbearance and put that on the face amount or if we reduce your interest rate or your mortgage payment or your interest rate. We can do a variety of things to help you stay in your house. What’s it going to take to make a win-win out of this?” That’s what we do. That’s where we make our money. It’s getting people to stay in their house and get reperforming. If they won’t work with us, then we’ve got to go the legal route in some fashion to either file a foreclosure or try to work a short sale or something like that.

The banks would sell to a company like you for pennies on the dollar. Not really pennies, but a short amount of money.

It used to be. In 2008, it was pennies on the dollar. It was a sizable discount, but they’ll still sell the less at $0.40, $0.50, $0.60 of value or what’s owed. It depends on the situation, the state the loan is in, and how far the borrower is behind.

They’ll do that so that they don’t have to take possession of the house.

They do it for a variety of a couple of reasons. If it’s in a long foreclosure state like New York or New Jersey, that money that they’ve got into the loan is tied up that they can’t touch for 2 to 3 years. Banks make their money by creating and originating a loan. If it’s a long foreclosure process, they would rather sell it to me at a fraction of what’s owed so they can take that money, go out and lend it out 10 to 12 times in a year. They will arbitrage their funds to get the velocity of capital moving. Whereas I bought that note at a big discount on what the value is, I’ll make my money by getting creative with the homeowner or the borrower and set up a modification or foreclose. Banks don’t like to foreclose. They don’t like REOs. That’s Real Estate Owned.

Whether you believe it or not, banks hate it because there’s no type of income coming from it. They would rather get rid of it. It costs them 2 to 3 times what it would cost us or me as individual investors to work that out and then go from there. HUD said years ago where they expected to sell more mortgages than actual REOs to investors like me because we as investors have a lot more options and being flexible in identifying opportunities in specific markets. We’re able to meet somebody maybe not in person one-on-one, but like, “Let’s have a talk.” We are invested because we bought it versus an hourly employee at the bank making $17 and $20 an hour. That borrower is another number on a spreadsheet.

People think that the banks want to foreclose on you. I hear so many times that people are like, “The banks are evil. They will repossess your home.” The banks don’t want to do that. They’re not in the real estate business. They’re in the money business. Scott used an interesting term, arbitrage. I don’t know if you ladies know what that means, but it’s basically they get the money for sure at a certain rate. They have to pay a certain rate to people that have cash in a bank or whatever. It’s a little more complicated than that, but then they lend it out at a higher rate. That’s where they make their money. They’re not making money by owning real estate. This is a great way for everybody in the whole train of people involved in a mortgage to benefit. Do you work all over the country?

We do. We buy in about 30 different states for the most part. It depends on what we see. We are not a fan of New York and New Jersey because it takes forever to foreclose in those states. New York’s going to cost you at least $10,000 to get started to foreclose. You’ve got to hire an attorney to talk to an attorney to have an attorney for the most part there. New Jersey will take you two years. We buy a lot in the Rust Belt states, Michigan, Ohio, Indiana, Illinois, Missouri, Kansas, the Carolinas. I’m a big fan of Virginia. Florida, South Carolina, Georgia. A lot of those states along the Gulf Coast as well too. People always ask me, “Have you got any notes in California?” I see them but it doesn’t mean I want to buy them, here in San Jose. Buy one note out in California, I could buy a block in St. Louis. You have to leverage your funds. I like buying in bulk because I can leverage and spread out the risk of my asset versus buying one individual note.

There’s a little bit more diversification. Not necessarily in the place, but in the different properties that you have and different owners that you’re dealing with. That’s great. Scott, do you teach people how to do this or do you have people invest with you? How does it work for you?

 

We do a bit of both. I’ve been training other real estate investors on how to dive into this niche since the last great recession. I’m a big believer that if you give people the tools, those that want to do something will go out and do it. I’m one of the few people that educate people and other investors on the niche of distressed investment. A lot of people talk about owner financing or performing notes, which are great. I’m one of the few guys that’s said, “Here’s how you roll your sleeves up. Here’s who you call. Here’s what you email at the banks. Here’s what you say, what you don’t say.” There’s so much debt out there. Before Coronavirus kicked in, 1 out of every 10 Americans was already a month behind their mortgage.

We were already still 30 days late or right behind a month for the most part. That number has increased. People don’t know their options. They don’t know that this exists. Let me clarify something. You’re not going to go into your local bank and knock on the door and talk to the bank person and say, “I want to buy some notes.” They’re going to laugh at you and send you on your merry way. There are specific departments inside the bank that you have to reach out to. We teach people how to do this. I walk the walk before I ever started talking to talk. We’re buying on a consistent basis. We’re showing people how to invest. We’ve got a fund in the final phases of getting approved. We’re going to start taking on some more capital to start taking advantage of some of these opportunities that are out there on the residential and commercial side.

What kinds of returns can people expect when dealing with notes?

Let’s start first with a performing note side because it’s almost a passive aspect of things. You can buy a note that’s been performing. You might be able to pick something up that’s in an 8% to 15% return on investment.

Let’s back up. Define performing for anybody because there’s performing and there’s nonperforming. Let’s get that clear first.

Performing is when the borrower’s on TikTok dancing. They’ve got a little performance going on. Performing would be the borrower is paying on time. Paid as promised monthly. The first or the fifth of the month, that payments coming in like clockwork. That would be a performing note. A reperforming note would be a note that’s like I bought a note. The borrower was not on time. They were late and we worked a situation with them to get them back on time. They’ve made at least 6 to 12 months of payments back on time again. We would call that a reperforming note. Banks, lending institutions, and other investors will sell performing notes off. It depends on what you can negotiate yield-wise. Eight percent to fifteen percent return on investment is pretty good for a performing note.

On a reperforming note, it can be a little bit on that higher echelon. I’ll give you an example. Let’s say a borrower has a mortgage for $100,000 on a $100,000 house. Their interest rate, let’s say, is 5%. I’ll buy that note at $0.50 on the dollar. If I can get them to start paying on time again, it’s instantly a 10% return on investment to me. That’s exciting for me. If I can get him to start to pay a little bit extra each month to get caught back up, that boosts my ROI up to 15%, 20%, which is nice. That’s the way we look at it. We’re going to pay a little bit extra or the discount. It depends on what they’re paying and then what the underlying debt or what we paid for. It would be great. If I were to sell that note for like$0.85 on the dollar, I’d make another 35%, which would be great. An investor comes in and they got a note that’s going to return them a nice return on investment with some equity there too, in case something goes south.

Non-performing, you turn into re-performing. That’s the goal.

We try to, yes. We try to get to re-performance so we can hold onto it for 12 to 24 months, not only for cashflow, but the upside of now it’s reclassified. We could sell it at $0.80, $0.85 on the dollar if we bought it at $0.50. We always try to get the borrower to bring a little bit to the table, so we get some money on the front end to secure it, cashflow along the way, and then a bigger payout in the back end. If the borrower doesn’t pay or it doesn’t work with us, then we take a legal route. That can cost you from $1,000 in Texas to $10,000 in New York for that. They try to sell it at the foreclosure auction or as an REO or sell it to another investor who wants to take it over and deal with that nightmare locally.

You would sell the non-performing that stay non-performing more as foreclosures.

It depends where it’s at. We always evaluate each asset. If it’s in Texas or Florida, I would probably take it all the way through, do a little rehab and then sell it on the market as an REO. Other times, it makes sense for us to sell it at the foreclosure auction at a price below or that makes sense with what’s going on at that auction. In some cases where we take the property back, if it didn’t sell at the auction, then we would either look at, “Does it make sense for us to do a full repair or sell it to a local investor as a handyman special or sell it at a big enough discount so that we can get our investment back plus some profit and turn around and double down and go to after 2 versus 1?”

You’ve covered some amazing information. We’ve got more to come in EXTRA, but before we move on, could you tell everybody where they could get in touch with you, Scott?

I don’t travel as much as I used to and I’m looking forward to getting back on the road a little bit, but you can find everything that we do at WeCloseNotes.com. That’s our main website. It’s easy to go there. You can find out our different podcasts or educational. WeCloseNotes.tv is our YouTube channel with over 1,000 videos and video podcast episodes as well for you to watch and learn as well too.

If you give people the tools, those who really want to do something will go out and do it. Share on X

Tell us about the special gift you have for my ladies.

This is cool to share with you. One of the things that we do in buying notes in real estate is we use a lot of other people’s money, private investor money. I’m going to share a strategy that we use either with our staff or VAs to harvest self-directed IRA investors literally in minutes from about every county in the country that you can use to market to fund your own deals.

If you’re subscribed to EXTRA, that’s going to be an EXTRA, which is going to be cool. You were talking about your one-day cliff notes version seminar that I know you’re also offering to the ladies. That’s for free, correct?

Yes. I get so many people that come from the rental side or the fix and flip side. They’ve heard about notes, but it’s like either somebody has taught way over their head or they didn’t talk in layman’s terms. Note investing is a pretty simple business. You got to know the players. It’s different than your fix and flips or taking a rental down. I have a one-day class that I teach monthly. It’s called my Note Weekend. It is the cliff notes version of me going in for 6 to 7 hours, breaking down performing and nonperforming notes and the things that you need to look at things you need to and why there’s such an opportunity in that space. If you go to NoteWeekend.com, use the special code MONEEKA, it’ll give it to you for free. It’ll give you that $49 class for free. It’s not a pitch fest. It is me teaching for six hours and you get the replays with it as well.

Is it online?

It is it’s delivered online via Zoom once a month.

Scott, are you ready for our three rapid-fire questions?

Bring it on.

Scott, give us one super tip on how to get started in real estate investing.

The first thing you want to do is you need to learn. That’s the most important. Learning and networking, those are a couple of biggest things I think a lot of real estate investors make. They get too busy watching TV versus going out and connecting with local real estate investors in the local market. Whether you’ve got a local real estate club, a Meetup group. You can go to Meetup.com and type in your city or within 10 to 20 to 50 miles where you’re at and often find a real estate club that you can go network. Those are the places that you want to go initially to learn, to get a good grasp of the basic concepts, learn some things, and then identifying 1 or 2 lanes that are working in this market. You want to network with those people that are pulling the trigger and doing deals that we want to do. Oftentimes the most successful investors are also the most giving of their time and resources. They’ve made enough mistakes. They often don’t want to see people make or you make the same mistakes. Go network and connect with as many people as you can. Grab business cards and start networking with the other investors in this space. That’s the first tip I would recommend anybody starting off.

Give us one strategy on being successful in real estate investing.

I know that you agree with this and others. You can’t be a secret agent, woman, or man and succeed in real estate. You have to get out and market yourself. For the love of God, you have to market. That means sending an email blast out, video and a blog. Figure out something that’s natural. You don’t have to do it all. These days, you’re not in a real estate business. You’re in the media business. Everybody’s looking to learn something new. We all are looking for eyeballs and earballs to look at you or listen to you. Get out and start developing your marketing skills.

If you’re going to be in real estate for more than a year, then start planting those seeds, start doing some videos, talking about case studies, share your story. People love stories because they identify that more than strategies. Start marketing yourself, start developing those skills on social media, video, email blast out to your audience, your network, and share your journey. That’s what helped make me successful initially. I know it’s what helps make other people successful. They don’t remember the case studies. They remember the stories and that’s one of the most important things that you can share. Share your story.

 

What is one strategy you would say that you use daily that contributes to your success?

Time blocking, especially when you’re a brand new investor out there and you’re juggling your passion for real estate, your job or career, and your family. You’ve got to learn to control your schedule. If you’re not productive and you don’t take your time seriously, other people won’t take it seriously as well. One of the biggest mistakes I made early on when I left the corporate world and gone to be an entrepreneur is my freedom of schedule nearly strangled me. I wasn’t dedicated to it. If you’ve got a limited number of hours each week because you’re juggling a full-time career and you only got ten hours a week, block out that ten hours. Maybe it’s only 1 or 2 hours a day, but be dedicated, create a Calendly link or some calendar that you can put it on and set up specific actions to get done.

Getting something done is better than nothing. Fifteen minutes of marketing, fifteen minutes of prospecting is a whole lot better than nothing. It’s like going to the gym. Maybe you can’t go and get a full workout and walk out drenched, but at least you got something done. Time block your schedule. You’ll be much more productive and be able to stick to a plan. You’ll see the little steps get you to a further and longer path to success than anything else. Those that don’t time block their schedule, they drift, they get distracted and they’re not going to find success as well. We all know that entrepreneurship is a winding testy road and real estate is like that. The more focused and organized you can be, the better you’re off in the long run.

Thank you so much. Such great information has gone into this portion of the show. Thank you for that.

Thank you. I’m honored to be here and honored to serve your audience.

We’re going to be talking about how to get investors, to fund your deals in your local market in under ten minutes, which I love. Scott is going to be talking about that in EXTRA. If you’re subscribed to EXTRA, please stay tuned. If you’re not, but would like to be, go to RealEstateInvestingForWomenExtra.com. You get the first seven days for free. You can binge on a ton of these extras and then see if it’s for you. You will get to see this next interview with Scott in there too. For those of you that are leaving us now, thank you so much for joining us for this portion of the show. I super appreciate you. I’m looking forward to seeing you next time. Until then, remember, goals without action are dreams. Get out there, take action and create the life your heart deeply desires. I’ll see you soon.

 

Important Links

• The Note Closers Show Podcast
• Inc.com
• WeCloseNotes.com
• WeCloseNotes.tv
• NoteWeekend.com
• Meetup.com
• RealEstateInvestingForWomenExtra.com
• NoteWeekend.com

Special Code: moneeka

 

 

About Scott Carson

Scott has been in the mortgage, finance, and banking industry since 2001 and an active real estate investor since 2002. He has been actively buying notes on residential and commercial properties since 2005.

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Find Private Investors In Your Local Market… Quickly! With Scott Carson

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Implementing the CARES Act to Benefit You with Lorraine Conaway

Listen to the podcast here

 

Financial Freedom is very high on the list for many people. The challenge is getting there. Where do I start and who do I talk to? How do I get everyone on my team to talk to one another and be on the same page?  For this reason, Lorraine Conaway and her partners at Blue Pacific Solutions Group have put together a network of professionals to create a systematic wealth strategy with a high concentration on education and most of all implementation.

Over the last decade, Lorraine and her team have facilitated over $200 Million in cash flow real estate and have referred over a half of Billion Dollars of loans. Their customers understanding the tax code and have generated millions of dollars of cash flow with increases between 30% to over 200%.

Contrarian to the industry. They do not wait for normal retirement age; they fast forward the Financial freedom date to their customers so they are comfortable to walk away from their W-2 jobs and spend time doing their passion and creating a legacy.

Lorraine began her journey in the financial industry in 1990, during a time when women were a very small percentage of the industry. Like many careers, the business evolved to where it is today. Her businesses include a tax firm, real estate and loan business, insurance agency and marketing company that has a high concentration on education.

Some of Lorraine’s acknowledgments; An award nomination for Excellence in Entrepreneurship by the Orange County Business Journal. A panelist at the California Women’s Conference in Long Beach, and as a keynote speaker at the Orange County Women’s Business Expo.

She is also a mother of two adult children and enjoys traveling, family time and sharing with people what she has learned over the years. Living her purpose!

In this episode we talk about:

1. Why is it important to know about some possible opportunities of the CARES ACT as a real estate investor?
2. Can the CARES ACT help me increase cash flow? If so How?
3. How do I know if I qualify?
4. What are the deadlines to take action on this opportunity?

To find out more about how Lorraine’s services can best serve you, go to http://bpsg.com/lc/bliss