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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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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

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SPECIAL EDITION: Creating Passive Income with Low Cash and Time Commitment with Roger Blankenship

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In this podcast, Roger Blankenship and I talk about an exciting new cash flow strategy that requires low investment and low time commitment. That’s how I like to do business! Like every single strategy out there it does have it’s challenges, but it seems to fill everything I’ve been looking for in a strategy, so I’m committing myself to it.

 

Ladies, through this podcast I have developed some amazing relationships with experts who I have grown to trust and admire. Every once in a while one of those experts makes an offer I can’t refuse. I normally don’t share those out with you until I’ve tried them out myself, but last week I got an offer I had to jump on, and it is time sensitive. It’s based on a club that is being managed manually and Roger can only handle so many people. So, for now, only 200 people can take advantage of this offer. I’m presenting it to you not as an endorsement, but just to let you know what I am doing and to give you the opportunity to join me if you resonate with this strategy.

 

The one thing I will say, with this and with all new strategies, invest slowly to test the waters. And don’t invest money that if you lose it, it will break you. However, when you hear this I think you’ll agree that this strategy has amazing returns with very low risk. It’s exciting and I’m delighted to share it with you. Listen in to my conversation with Roger as he explains exactly how this works.

 

After listening, if you would like to join go to:

blissfulinvestor.com/bor

 

If you want more information listen to this webinar replay:

Blissfulinvestor.com/BORWebinarReplay

 

If you decide to join the club, please make sure you let Roger you were introduced to him by me so that you get the additional credit being offered to my ladies.

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How to Break Past the Fear Barrier with Tony Maree Torrey

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Tony Maree is an Australian born now based in Los Angeles, Tony Maree has been dubbed LA’s Foremost Success Coach. She is the founder of the Innate Wisdom Business council and host of the Legacy in the Making Show a video podcast.

For the past 18 years, Tony Maree has been hired by CEOs, celebrities, and top performers to help them transform limitations into strengths, amplify their instincts & have a profound impact in the world.

She combines the power of traditional coaching and psychology with evidence-based advanced modalities in a proven 9 phase Legacy Maker coaching system.

Her vision is to empower thousands of leaders to activate inner wisdom and create unprecedented results. All without sacrificing their health, relationships or wellbeing.

Beyond her traditional education, Tony Maree has spent hundreds of thousands of dollars building skills and certifications ranging from Executive Coaching to Rapid Transformational Therapy in order to facilitate fast and lasting transformations in the lives and legacies of her clients.

In this episode we talk about:

• Launch your most effective, speedy and insightful decision-making skills with my 6 step Innate Wisdom activation process
• Expand decision making stamina
• Reduce fatigue driven mistakes
• Increase confidence, self-trust and peace of mind

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How An Aussie Can Move Half Way Across The Globe With Limited Funds with Reed Goossens

 

Your dream of financial freedom is attainable with the right strategy. In this episode, Reed Goossens, real estate investor, joins Moneeka Sawyer to share his journey moving across the globe from Australia to the United States with limited funds and how he found success and financial freedom. Reed talks about building a holistic long-term business by creating an ecosystem to recession-proof his business. By having diversified multiple streams of income, Reed dives into how you can create your own ecosystem that’s more stable in the long-term on your way to wealth generation and financial freedom.

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How An Aussie Can Move Half Way Across The Globe With Limited Funds with Reed Goossens

Have you been interested in investing in real estate, but nothing you’ve looked at so far looks blissful? If so, I totally understand. That’s why I’d like to introduce you to Maureen McCann at Spartan Invest. At Spartan Invest, they strive to identify real estate assets which will offer viable investment options with exceptional rates of return. They do the work for you. They locate, purchase and rehab the property, then find and manage the tenants. You simply invest in a turnkey property and monitor your investments from the comfort of your own home. What could be more blissful than that? If you would like to find out more, go to www.SpartanInvest.com/Investing4Women, or email Maureen directly at [email protected]. Let her know I sent you.

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I am delighted to welcome to the show, Reed Goossens. Reed is a real estate investor, bestselling author, entrepreneur, podcast host and an all-around good bloke. I love the way he says that. In 2012, Reed quit his job in Australia and moved halfway across the globe to the United States to change his life and to chase a dream. With limited funds, no investing experience and no credit, Reed went from purchasing a small duplex to growing his own real estate investment firm. Reed syndicates large multimillion-dollar deals across the United States. He has also achieved financial freedom and has taken control of his life. If we can move halfway across the world and achieve this success, so can you.

One of the things I want to tell you, ladies, about Reed. I was on his show. I’ve been on a lot of shows and this was probably the best show I have ever been on. Reed is heart-centered in spite of his success. I know many people come on here and want to talk about how amazing they are, but I’m not sure whether it’s in spite of or because of his success. He is so heart-centered. That interview warmed my heart. I was tingling for days remembering the conversation and what I learned from it. I’m delighted to share him with you. Reed, thank you so much for blessing our show by joining us.

That’s a very awesome introduction. Thank you.

Welcome to the show. Could you tell us a little bit about your story, like the two-minute version?

You pretty much summed it up. I moved here in 2012 to chase two loves of my life. One was the love to live in New York City, to be an ex-pat. My background is instructional engineering. The other love was for a girl who is now my wife, Erica. We live in sunny, California. We were in New York for a couple of years and then moved out here. When I first moved out here, it was more to do with the fact that I wanted to live in the United States for a period of time and not have the fear of regret when I’m 60 or 70 years of age. Fast forward many years later, so much stuff has happened and it’s been an incredible journey and I loved every single minute of it. I know the next decade is going to be even better. That’s the two-minute pitch in terms of the coming to America story, wanting to chase a dream, wanting to scratch an itch and opening doors and walking through those doors and throwing away worrying about ten years later what’s going to happen. Enjoy the now, the moment, being in the present.

Where in California are you?

We are in Los Angeles. We are near Culver City if you know where that is.

Reed, I know that you talk about creating a holistic long-term business, which is what I’m all about also. Could you talk to me about creating what you call an ecosystem to recession-proof your business?

Enjoy the now of the moment and being present. Share on X

When you start scratching this itch of how to create financial freedom for yourself, you increase your financial IQ. I’m very much a math nerd being an engineer. I love numbers. When I got into real estate, it is a vehicle to achieve financial freedom. To have a legacy wealth and long-term freedom of having time on your hands, it’s the other ancillary business that you can create from the one vehicle that will feed one another that will ultimately create this system. You could remove yourself from it and continue going without you being in it. What am I talking about? We talk about funnels and there’s the marketing side of it.

I do my own podcast. I have my income streams from the marketing side piece of it. There’s obviously the deal of the acquisition side, which is important. It’s a very massive pillar that supports the foundation, but it’s one pillar. From there, there are other businesses that we can create. In my business, we don’t do it now, but you could do property management, you could bring that in house and you could create fees and income from that. You can also create construction management, which is something we do in house for our deals. We’re not outsourcing it to a third party and giving someone else the profits, but bringing the profits in house and making it more sustainable.

Through doing that, you create this system of one feeds the other and that keeps the profits in house. It creates better returns for our investors. It also helps when you may not be acquiring assets, you still have other income streams coming in through the management of the portfolio that may be in the past, you’ve given it away to a third-party company. Instead, you now brought it in house and creating that ecosystem. For me, long-term wealth is created through creating ecosystems. That’s just one example. There are many different examples of what an ecosystem can look like within any business. It’s understanding the stuff that you may do on a daily basis that you may pay for that you could potentially bring in house over the long-term.

It’s interesting because we hear over and over again that the rich have seven streams of income. A lot of times what people think is that seven different businesses, “I’m going to do this MLM and I’m going to do this job and then I’m going to do this.” What is the mistake in that is that you end up being spread thin between all of those different avenues of creating a stream of income. The rich don’t do it that way. They are not plugged in to every single one of those pieces. What they do is they create passive income and other income streams that are related to their main business or main genre. For instance, our genre is real estate. What you talked about is multiple streams of income within the umbrella of real estate. When we’re creating multiple streams of income, like you say, if you’ve got one that’s not performing but another one is, your business is still fine or another five are. It gives you an opportunity to be successful in different kinds of markets.

Different kinds of markets, but also different kinds of volatility in the markets. When one market may be going better or now in COVID, acquisitions have gone completely to a grinding halt. Having other ancillary fees coming in like asset management fees or construction management fees or property management fees that can keep the business supported and keep the lights on, it’s important to creating that ecosystem that we spoke about, those multiple streams of income.

Could you talk a little bit about if you’re a professional working full-time, how this might fit into your ecosystem investing in real estate?

If you like what you do, and some people do, they don’t want to quit their job and they only want to be passive. That’s the beauty of real estate investing, particularly in the syndication’s world, which is what I am in. I’m in the multifamily, but you could have an ecosystem of diversification. Meaning that you could have your passive dollars invested in different asset classes. There could be some multifamily, it might be some single-family investments. There might be some mobile home parks or some warehouse, some self-storage or some office space. All of that can help you be diversified and have those multiple streams of income. When one asset class is sucking wind like retail right now, you might be more heavily reliant on multifamily or more heavily rely on a warehouse, whatever that might be.

That helps you create the multiple streams of income, which makes your little ecosystem as a passive investor more stable in the long-term. That’s why I think from the passive side is powerful about the vehicles that are now accessible to the average investor. Maybe several years ago, these vehicles went away and weren’t available. The way in which we’ve evolved over time, with the way we’ve invested in people not wanting to invest in the historical traditional ways of investing in the stock market and going investing in hard assets with different operators has become more plentiful in the last 5 to 10 years. That has opened up a Pandora’s box of opportunities for investors to go out and we’re like a kid at a candy store.

I want to give a little bit of clarity on what Reed is talking about here. It’s to invest in other operators. This isn’t you go out and invest in a single or in a multifamily, a mobile home park, a warehouse or whatever. This is finding other operators that you trust that are paying you. Everybody has a different schedule. Some of them will pay interest. Some of them will pay interest plus equity. There are different formulas and you want to find an operator that you trust and then take a look at their formula and see if both of those things work for you. If you’ve got the cash, then you can turn it over and make quite a nice return. It’s easier to diversify that way.

Reed, tell me if this analogy works for you or if you’ve got a better one. It is like investing in the stock market where you’re investing in a company that has a series of assets that then will pay you on. The big difference here is that we have hard assets as opposed to paper assets that we have no control over. When you’re investing in a syndication, some have a level of where you can vote or make an impact. The other thing is they are usually smaller operators that do feel very committed to communicate with you. That is different than a lot of the bigger companies that you can get stuck on there. They say they’re committed to their shareholders, but that looks a little bit different to us than we might hope for. You do get a lot more control as a hard asset in a syndicator that is going to be paying you.

That’s where the transparency comes in. You have the element of the hard asset for the depreciation benefits. Also seeing that you’re investing in ABC Smith Street. It’s not just throwing your money into the stock market and hoping that it’s going to do well for you. It’s a physical asset and you can see it. To your point, it’s usually smaller operators like myself who will communicate directly with the investors that can see what’s happening. They can walk the property if they want. We encourage investors to go walk. They’d probably keep an eye on the onsite team, make sure they’re doing their job. That’s your money in that deal. There are a lot of benefits of investing in smaller operators, in physical assets, in syndication that you don’t have to be the expert going out and finding these deals. You can be more of what’s called an armchair investor, passive investor and go along for the ride.

Where do you do most of your syndications?

We do most of them in Austin and San Antonio in Central Texas.

We’ve had several people on the show from different areas. I like people to see that if you like the Texas market, you might call Reed. If you like a different market, you might call one of the other people that have been on the show. That’s a great resource. Thank you for that. Could you talk to me about re-entitling land? This is my personal strategy, so I want someone else to talk about it so I can learn.

You look at it like flipping paper, but to boil it down to its nuts and bolts is highest and best use. What is the highest and best use for a piece of land? I’ll give you an example. You might have a single-family house on a larger lot that you could simply split into two lots and you can sell one of the lots and make a profit. That is a highest and best use because it zoned for two lots. Back in the day, back in the early 1900s or wherever it was when the house was built and zoning laws have changed a ton with density increasing and housing crisis, particularly in places like LA and up in the Bay Area where you are. Zoning always evolves over time.

You can find these gems where you can split the block. You could find with a single-family, but maybe you could build a fourplex on it. It’s a highest and best use. Here’s the rub. You don’t have to go and do the construction. You could go in and get the physical paper or the plans approved for a second edition, or a full unit. You can sell that paper to a developer who wants to build it. There’s profit in that. You can’t go to a broker and be like, “Tell me what all those pieces of paper we’re selling for to those developers.” There’s no actual MLS for that, but you can go and create value out of literally the house that you own, going to the city and saying, “I want to build a granny flat on the back. I know by looking at the zoning laws, I could potentially build a fourplex.” Maybe that’s your exit strategy.

You’ve created value for someone because also you’ve taken risks off the table. If you’ve gone to the city and spent time negotiating with the city and going through planning approval and they get comfortable like, “This is a good idea. Let’s put four units on it.” You can package it up. You can say, “Here, developer, go nuts. Here’s my piece of land. Here’s a single-family house on it. You could build four units on it. You take all the construction risk. I’m going to walk down the road with my profits and go do something else.”

You can find those in the MLS. It will often say, “House for sale, great contractor, special plans already approved by the city.” We will look at those properties myself because every once in a while, I might want to pick something up like that. Everything has gone through the city. I’m not dealing with that piece of the paperwork.

Long term wealth is created by creating ecosystems. Share on X

It’s very bureaucratic. In saying that, once you do get to know the planners and your local municipality, it’s not as hard as people think. It’s a people’s game. You’ve got to make sure you’re on it. Person A is talking to Person B and the right hand is talking to the left hand.

This is my thing. I talk about how to go in and take a look at a property. I’m calling it an underdeveloped property. It’s a property that has something on it, but it has so much more potential. I don’t have very many people that come on the show that talk about that. What I love is your strategy about the value add. You buy the land and then the value add is you go through all the bureaucracy. You upsell it. It’s almost like a wholesale deal, but it takes a little longer.

The people who are out there reading are thinking, “How do I even get started?” There are many municipalities around the country that are very gray. Compared to my home country of Australia, they have incredible systems online that you can go see what the zoning is. What I’m encouraging people to do is educate yourself in your local municipality about what are the zoning laws? Here in LA, there’s R and there’s C. R stands for Residential, C stands for Commercial. There’s more but I’m not going to get any more complicated than that. It starts with R1. That is like a single-family block, you can only build one on it. There’s R2, there are R3 and R4. As you go down the line, what happens is the zoning laws then tell you in plain English, you can have the smallest amount of habitable space, meaning it might be for example an R4 lot.

You can have an R4 lot and the smallest dwelling size on it can be a 450 square feet unit. If you’ve got that in the back of your mind, “I’ve got 10,000 square feet here. I can maybe split this block up into X amount of units.” There are setback issues on the front and the back, and I’m not trying to get too complicated. What I’m getting at is that there is a lot of information readily available at your fingertips. You can find out exactly what zoning you’re sitting on right now, what block you’re looking at to see what’s the highest and best use. An R2 lot is a great example. My wife and I bought an R2. It’s a single-family house, but it’s on an R2 lot, which is a 5,500 square feet lot that I can put another dwelling on the back.

I’m not trying to change the zoning. It’s the highest and best use. It wasn’t built to the highest and best use back in the day. That’s the easiest way to get approved because the city can’t stop you if it is the highest and best use. For example, it’s an R2 lot. You can build two dwellings on it. You’ve only got one. You’re not changing anything. You’re literally going through the process, from A to Z, stock standard stuff to get it approved. It’s not like zoning changes where you need to go in and some developers do that. It’s something that you need to be very educated on to do, but that takes years.

Where something that is buy right, that’s the thing you need to need to understand, “I can buy right to build two dwellings on this block or I can buy right to build four dwellings on this block and it’s only got one.” Know that in the back of your mind that you can find that information online. When you go to the city, they’re not going to put up these red flags. “This is my right to build. I own this land. I can build four units on it and you need to approve plans for me.” You go down that path with the city and it takes a period of time. It won’t happen overnight. Once you do get it, there’s value in that. That value you can sell to some other person or you can build it yourself if you want.

There’s also value in building that relationship with the city like you said. There are a couple of things I want to add here. He talked about rezoning. Also, don’t ask for variances because again variances will slow things down quite a bit. Variance is a fancy word for exceptions. I want to do something a little bit different. It’s only this little thing. If it’s such a little thing, don’t ask for it because it will slow things down quite a lot. The other thing is to take the time to get to know the planners and the engineers in the planning departments of your city, especially when you’re starting. Even though everything is laid out online and with the zoning, you’ll have things come up. One of my favorite questions with my different planners that I go and see in the different cities is, “Is there something I should be asking you that I don’t know to ask?”

For instance, I’ve got a project that I’m interested in Campbell and they’ve got all the electric wires above ground, but they’re trying to change in that particular area to have everything underground. Every single developer that comes in that gets new permits has to go underground. There’s no way we could have known that by looking at it online, but I knew it because I went in and they know me. Everybody in the office was like, “Moneeka, you should be paying attention to this. Moneeka, this is probably going to cost you about another $100,000 on that project.” I was like, “At least now I know what my hard costs are, what my soft costs are and what this is going to take to make it happen.” As you start to open up that conversation and you’re a likable person and they want to help you out, you start to have these conversations where you get so much more information about what’s possible.

I don’t know what it’s called up in the Bay Area, but at least here in LA, it’s called a Q condition. It’s a Q overlay. You might view it online. It’s an R2. This is what it is. When you go into the actual city, there might be what’s called a Q overlay where they may have added something that the website hasn’t picked up yet because it hasn’t kept up in real-time. A bill modeling passed down by the local council to say, “We want all power lines now to go underground.” That might not be online yet because it was only past 6 or 7 months ago. Keeping those relationships up is important.

 

The one thing I’ll also add is how blown away I was when I first moved to this country that pre-COVID, you could walk into most cities and have a chat with someone who is in the city planning department, and they’re willing to do it. You’re taking a ticket at a meat sale line and I call your name out and you go up and say, “I’m looking at this particular piece of land. Is there anything else in this state or county in its Q conditions? Are there any other Q conditions I need to be made aware of to see if I’m doing my due diligence?” You can do that before you even bought the property. In Australia, you can’t do that. The system isn’t set up like that. Realize that the access to information here is so much greater than when you’re trying to develop in other countries, even like in my home country of Australia.

Originally when I started doing this, I was like, “I haven’t made an offer. I don’t know if I’m going to buy this place.” I felt a little bit bad about taking their time, but no, they love it. They love chatting. It’s like a puzzle for them. They’re like, “Yes, we could do this. We could do that.”

The other thing I’ll quickly add in there is for us, we bought this house. It was 1912. They don’t have any plans on record of what the house looks like. They have some very loose papers that it’s a 3-bedroom, 1-bath, but they don’t have physical plans of it. When you’re going in to do these improvements, they love the fact that you’re bringing plans to the city and that goes on file for the next 100 years or whatever it is. The city is incentivized to make sure they’re collecting as much data as they can. When you’re in there, even when you’re prospecting, they’re interested to know what you might want to do with it because that might give them ideas for their planning or urban development committees in their file.

They aren’t having conversations for no reason. They’re having a conversation listening and taking them back to their superiors and giving feedback, “We had someone come in today. They’re looking at doing X, Y, Z. What do you think of that? Does that go with the plans that the mayor wants to do for the downtown urban center or whatever it might be?” Most cities will have that. I bring up another point. Different cities called different things. I know in like the city of Long Beach, they call it the downtown urban development plan. It’s a book. It’s 100 pages of this outline of what they want to invest in the city over the next 20, 25 years. They have different areas they want to inject money into. They want to have certain sidewalk improvements. They want to have more shops and mixed-use areas. You can read that and see if it aligns with what their downtown plan might want to be and look like in the future. Get your hands on that. It’s great nighttime reading if you’re interested.

It’s also impressive because one of the reasons why I get things through is because people know that I’m interested in the community. I’m not some developer coming in and saying, “I want to make $2 billion.” I care about the community, what’s going up, what’s their plan, how to make something beautiful and how to up-level the community in different ways. I’ll often go into what we call redevelopment areas. If you’ve done that reading or at least scanned it, they’re like, “This particular developer is interested in us and our plan and what we think, not just in themselves.” That makes a huge impact on them.

You’re doing a great job. It sounds incredible. I want to come and join you one day.

I would love that, Reed. Let’s do it. I can do something down there with you. That would be fun. We are going to have more of Reed in EXTRA where we’re going to be talking about what he calls his six Ps, which is all about what successful people do to up-level their relationships to increase their business. I’m excited to talk about that in EXTRA. Reed, could you tell everybody how they can get in touch with you?

The simplest and easiest way is to go to ReedGoossens.com. If you go there, you can find my podcast. You can find books. If you are ever coming through LA and you to hit me up, you can send me an email at [email protected]. Give me a little bit of heads up and we can go out for lunch, coffee or whatever you want. We can talk shop. For those readers, if you are interested, I have a book out and I’ve got a lot of them sitting in my office at home and my wife is nagging me to get rid of them. If you want a free copy of my book called 10,000 Miles to the American Dream: Our Story of Financial Freedom, email me at and I will shoot you a free copy. Just say you read the show and I will shoot you a free copy.

Could you tell everybody what your amazing podcast name is?

You don't get to deal number ten without doing deal number one. Share on X

It is called Investing in the US. It is a collection of conversations of people coming and creating something from nothing in and around obviously real estate, but overdoing it. We talk a lot more about the journey and creating something from nothing. Check it out.

I was fortunate enough to be invited to be on that show. Go check it out. It’s good. Reed, are you ready for our three rapid-fire questions?

Let’s do it.

Give us one super tip in getting started investing in real estate.

A quote that my dad always said, and I use this all the time, “A fool and their money are easily parted.” Don’t be a fool when it comes to your money and be educated. Start with education. I’m self-educated. I didn’t go to school for real estate development. I went to school for engineering, and I’m all self-taught about how this business and how to go out and be successful. The same can apply to the readers.

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

Getting started. Everyone asks me, “What’s the best deal you’ve ever done?” I said, “It’s the first one,” because you don’t get to deal number ten without doing deal number one. Getting off the fence, there comes a point in the education piece at the start, and then you get to analysis paralysis where you start spinning your wheels, and then you need to go take action. I vividly remember reading books on the subway in New York City and thinking, “I need to get going. I need to go do my own deals because reading a book isn’t going to do anything for me.” It’s like reading about losing weight. You’ve got to stop reading that and go open the door and go to the gym. It’s the same thing. Take action. Educate yourself first and then go and take some action, and massive amounts of it because it’s going to be needed to get you to that first deal.

The other thing is don’t feel like you need to be so educated that you know everything. Going to the gym, it takes time to build those muscles and you’re going to learn different skills and increase your capacity. All of those things change, but you have to start somewhere. Get enough education to get started and then take action. What would you say is one daily practice that you do that contributes to your personal success?

It was changed over the years. As I become more self-aware of my subconscious, and it sounds like you talk a lot about on this show, which I’m very much a huge believer of. I have changed my mindset around some things that I’ve had hang-ups in the past. Meditation is a big one for me in the morning. Taking some time in the morning to sit with my thoughts before jumping into the day. I’m very much guilty of trying to turn the phone on too quickly or jump into emails and having that quiet time, being prepared, being self-aware, centering yourself, and then not going often in tackling the day. When I don’t do my breathing exercises in the morning, it throws the whole day off. That’s a massive spanner in the works. I don’t feel as productive as what I usually do.

 

Probably that and exercising are the two big things. A lot of people say that a level of mindfulness. It’s counterintuitive. People are like, “I don’t have the time for that. I’m busy. I’ve got a lot to do.” The problem is that if you don’t do it, you need a lot more time to do the things that you need to do. If you do get centered, you do meditate, you do take some time to be very introspective, you are so much more productive during the day.

You stop that chatter of, “I’ve got too much to do,” because all of a sudden, you find time to do those important things, which is working on yourself first and foremost before you can help others.

Reed, thank you so much for all you’ve offered in this portion of the show. I can’t wait until the next portion.

Thank you so much for having me. I hope everyone has learnt a little bit and remember to reach out if you’re ever in LA.

If you are subscribed to EXTRA, we have some awesome stuff. We’re going to be talking about Reed’s six Ps, which will help you to create the relationships that will build your business. I’m excited to learn all about those. If you’re not subscribed to EXTRA but would like to be, go to RealEstateInvestingForWomenExtra.com. You get the first seven days for free, so you can check things out. See if it’s like up your alley. You can binge on a bunch of stuff. The other cool thing is that EXTRA comes down on whatever device or app you’re using. You don’t have to have new technology around that. That’s cool too. Go check it out. If you’re leaving us now, thank you so much for joining us for this portion of the show. You know how much I appreciate you. I look 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. Bye.

 

Important Links

• Spartan Invest
• www.SpartanInvest.com/Investing4Women
• [email protected]
• Reed Goossens
• [email protected]
• 10,000 Miles to the American Dream: Our Story of Financial Freedom
• Investing in the US Podcast
• RealEstateInvestingForWomenExtra.com