Thoughts from the Desk of Bob Repass…
At times, it is inevitable that certain words or phrases get tossed around over and over so that we tend to forget what the message behind using them was in the first place. It seems like over the past couple of years the word “mindset” has become one of those words.
We have been told many times of the importance of having the proper mindset in order to be a successful entrepreneur, real estate investor or a note investor. By definition, mindset is a mental attitude or inclination, the established sets of attitudes held by someone.
Last month marked the one-year anniversary of the death of NBA Hall-of-Famer and 5-time NBA Champion Kobe Bryant. Bryant, along with his daughter Gianna and seven others, died in a helicopter crash January 26, 2020.
During his 20-year NBA career, Kobe was well known for his mindset, known to all as the “Mamba Mentality.” Kobe created his established set of attitudes that drove him in his professional and personal lives known as “Kobe’s 10 Rules.”
Let’s take a look at how we can apply these rules to create a better mindset and apply them to our real estate and note investing business.
- Get better every single day: Improving is a constant process. It takes a structured routine and plan to do something each day that will make you better at your craft. I carve out at least 30 minutes each morning to check out the latest news on the economy, housing, and real estate markets. I stay up to date on pending legislation that may impact our industry. Always be learning with the goal of getting better every single day.
- Prove them wrong: There will always be naysayers. Whether they are family members, friends, peers, or competitors some people will doubt what you are doing will work. You may hear “that’s a stupid idea,” “you will lose money on the deal,” or “why would you invest in that?” Use this as motivation to see it through. It is always a good feeling when you succeed and get to hear “congratulations, I was wrong, way to go” from those who doubted you initially.
- Work on your weaknesses: First identify where you are weak. Is your marketing weak? Is your due diligence weak? Are your negotiating skills weak? Then work on improving in that area. Reach out to a mentor or a colleague who is strong in that area. Read or watch training videos on ideas on how people have developed ways to be successful in those areas you need to improve.
- Execute what you practiced: Sooner or later it is time to pull the trigger. You have practiced and trained enough and it is time to get in the game. Through my many years in the note business I have seen many people suffer from the “paralysis of analysis.” Overthinking, afraid to buy that first deal and second-guessing themselves to the point that they never get in the game. Be confident that you have practiced and are prepared and get that first deal under your belt.
- Learn from greatness: I am truly amazed at the number of times I see people new to our business asking for advice from people in a Facebook group. A lot of times they have no idea of the knowledge or experience the person giving the advice has. I have seen folks ask for legal advice from other members in a Facebook group. It is great to share experiences, referrals, and network in that kind of forum, but to truly learn you need to connect and yes sometimes pay to learn from those that have been around a long time and can save you time and money by not making the same mistakes they have seen others make over the years.
- Learn from wins & losses: I have heard great athletes such as Kobe, Tom Brady and Derek Jeter say they sometimes learned more from their losses than their victories. That is also true in the note business. Building your processes and modeling must take into account BOTH the wins and the losses. Just because one deal was a home run does not mean they all will be and conversely just because you lost money on a deal does not mean it is time to go do something else.
- Practice mindfulness: Details matter, the little things matter. Do not confuse this with “paralysis of analysis” I mentioned above but be mindful of the details.
- Be ambitious: To be successful in the note business you must have a strong desire to achieve. Do not be naïve as this will require determination and hard work. I like to say, the note business is simple, but it is not easy.
- Believe in your team: Regardless of whether you are a one-person shop or have a staff of employees, the note business is not a one-man team. You may not have employees, but you still rely on virtual assistants, vendors, and service providers. Surround yourself with the best and believe in them. Let them do what you hired them to do.
- Learn storytelling: As the saying goes “Facts tell; stories sell.” I like how the writer, director and television producer Alan Ball put it “I would say try and tell stories that you care about as opposed to stories you think will sell.” So, in that spirit, I suggest you start with telling your story of how has the note business impacted your life?
I want to encourage you to apply Kobe’s 10 rules to your real estate and note investing business starting today. I am confident it will help you get to the next level of your journey.
There Is No Formula For Success, And Here It Is
by Eddie Speed
I would never say that success is 100% guaranteed. But I want to give you a short list of essentials that will greatly improve your chances. (I wish somebody had handed me this list when I started out forty years ago!)
For the last twenty years, I’ve been training people in the art of creative financing. And I had been doing creative financing for twenty years before I ever started teaching it. It took me a long time to perfect the process, build the toolbox, and make it transferrable to people who wanted to learn.
But wanting to learn is not the same as wanting to succeed.
Here is my list of six essentials you must have to succeed in the note business. By the way, I’ve never met a successful person who didn’t apply all six.
People talk a lot about where to invest their money, but you need to first decide where to invest your time.
We’re not all blessed with the same amount of money, talent, or good looks; but we’re all blessed with the same number of hours in a day. So take a serious look at your “to do” list. Decide which of those things only you can do, and which of them can be done more efficiently by outsourcing or delegating them to someone else. It’s often the things you’re not very good at that suck up all your time and prevent you from focusing on the things you’re good at and enjoy doing. I’m not a good bookkeeper and I don’t enjoy it at all, so I have an excellent team of bookkeepers who free up my time to do what I’m good at.
Here’s another example of how I learned to invest my time wisely a couple of years after starting out. In 1982 I had one of my first breakthroughs. I realized that every seller financed loan recorded at the courthouse contained the address of the person who owned the note. I would drive to a courthouse, rummage through the huge, dusty books and collect names of note owners, then mail each one a letter to see if they’d sell me their note. It was very time consuming, but at the time it was the best source of finding existing notes. So I started hiring people to do it for me, which freed me up to do other things. I soon had over a hundred people all over the country combing through dusty courthouse storerooms to find note owners. I could make much more with my time than the $14 an hour I was paying them. (Fortunately, the information is now digitized so that method is a thing of the past.)
Every real estate entrepreneur needs a Rolodex of quality vendors to outsource various tasks—from plumbers to roof repairmen to property managers. The NoteSchool community provides an excellent network for students to connect with a wide range of top quality vendors.
Your time should be spent on negotiating, deal-making, and creative thinking—not fixing toilets or trimming hedges. Always remember, you get paid the most when you’re the most creative!
You have to know yourself and how much annoyance you can tolerate in various areas. You don’t want to get involved with deals that keep you up at night.
We recommend using a personality test called the Predictive Index. It’s like a microscope into your DNA that reveals how you’re uniquely wired. It uncovers your strengths and weaknesses in a huge range of areas. It helps you discover whether you’re a big-picture visionary or a detail-oriented process person. Either type of person can succeed, but you need to know what you’re good at and bad at so you can focus on your strengths.
Once you know what you’re best at, and how risk averse you are, you can design your business around your unique strengths and outsource the rest. As I’ve said before, find whatever it is in life that you’re good at without even trying, then try your hardest.
It takes money to make money, but it doesn’t take your money to make money. If having capital was essential to starting a business, nobody would have ever heard of Eddie Speed.
Only about half the people we train have significant capital to speak of. If you’re reading this and you have no capital, that’s not your death sentence. People get rich by making investments using other people’s money, and we teach lots of ways to find passive investors to fund your deals. Once you have capital, you need to invest it wisely (whether it’s yours or someone else’s) so that it can be grown to maximum potential.
Some investors want to work along with their capital, while others just want their money to do all the work. Millions of people invest their capital in rental properties only to have the rude awakening that their investment turned into a job. Landlording is never as easy as it looks on HGTV.
You can be an active investor (who hunts down deals and negotiates the terms), or you can be a passive investor (who is willing to make a smaller return and let someone else do the work). Pick the strategy that fits how much money you want to invest and how much effort you want to invest.
- DIRECTION AND DESIRE
Before you take the first step of any journey, you need to first decide on your destination. Ask yourself some important questions: “Where do you want this career to end up? Does everything you do bring you closer to your desired outcome? Will it lead to your happy factor?”
The direction you go will determine where you end up. You want to avoid having to make a U-turn after years into your journey. I meet people all the time who own a business they don’t want to own. They ended up in that predicament because they weren’t clear about what they wanted out of life when they started.
Here’s a great example of someone who knew exactly where they wanted to end up. Years ago, my wife Martha started buying notes for our retirement account. She outsourced tasks so she could focus on her strengths. She perfected the process and now others execute the process she perfected. Her goal was to have sufficient income at her current stage in life so she could enjoy being a Grandma. And she’s lovin’ every minute of it!
- EXPERIENCE AND ENVIRONMENT
I feel safe in saying that no training company in the real estate space has a wider band of students than us. Some of our students buy hundreds of houses a year. Some have extensive financial backgrounds. And some have no real estate experience whatsoever. How can we mix that range of students so that one’s not bored and another lost?
The answer is simple. They all come to us with the same knowledge gap in what our end of the business is. So in that sense, they’re all equal.
The guy who bought 200 houses last year may not know any more about structuring creative terms than the guy who bought one house or none.
By learning how to architect deals with terms in your favor, the guy buying 200 houses can be better at his trade, and bring deals back to life out of the trash can. The new guy can learn how to put his first note deal together, then the next, then the next.
Never let a lack of knowledge hold you back. Commit to lifelong learning. The 20-year old Eddie Speed who started in 1980 had zero real estate background, and there was no class to enroll in. I thought a loan was being by myself!
I was mentored in the note business by my father-in-law, and I never would have succeeded without his help and support. By providing both knowledge plus connections with likeminded investors and vendors, NoteSchool is more than just a place to learn—it’s a vital community.
- WILLINGNESS TO TAKE ACTION
When I first started, I was pretty awful at just about everything. I had no capital, plus I had dyslexia (and I still do). But there is one thing I would give myself an A in.
I was willing to take action. (And I still am!) It’s the intangible X-factor that has to come from within.
It breaks my heart when we teach people how to make deals but they never take action. Fortunately, most of our students do start making deals right away. We show them how success is possible, then they fall in love with the business.
We show them what the end result looks like, sort of how a gym shows a person what it’s like to be in great shape. People may not fall in love with the workouts or the strict diet, but they sure fall in love with the end result.
Well, I’ve given you half a dozen essentials to achieving success. I hope you’ll review this list frequently because knowledge is only helpful if you apply what you learn. You can become a walking encyclopedia of knowledge, but if you never apply what you learn it only gives you a bigger head.
Wealth Organization 2021
By: Ryan Parson
It’s been almost a year since the global COVID-19 pandemic began, and most of us have spent that time trying to get through 2020 and move onto 2021. While we are all still dealing with this pandemic, we’re in a place where we have more understanding, better treatment, and finally a vaccine being distributed worldwide. Now that we’ve finally arrived in 2021, a very happy and healthy new year to you all!
A new year is often associated with ideas of growth, change, or introspection, and you should carry that mentality into your wealth organization in 2021. Understanding how to better integrate and organize your wealth affects your ability to be able to stay financially independent through this next market cycle. The market volatility that we’re seeing now is even greater than what it was a few years ago, or even in the last 10 years.
We don’t have to look much farther than the traditional stock market to see these wild swings in market behavior. Even in alternative investments, where there’s not a public exchange and perhaps not as easy to see, there is movement occurring.
When we make alternative investment decisions, we often do so in a silo. As most of you know, I grew up in the Midwest where I was surrounded by cornfields and farms, so the analogy of silos feels appropriate. What I mean here is that we often learn about an investment opportunity and dive in without considering the implications that investment could have for our holistic wealth objectives — you’re filling one silo instead of taking a look at how all your silos are doing. You may have made investment decisions in the past with more of a singular focus lens as opposed to a holistic planning lens.
This is why it is so critical to be organized, especially as we come into the New Year. Every investment in your portfolio is a silo and you need to manage them all harmoniously. Reaching that harmony and getting your wealth organized has several key components, some of which we’ll cover here and which I covered more extensively in our most recent Industry Experts Webinar.
Understanding the Stakeholders
That’s you. It also might be your spouse, your children, or your grandchildren. Understanding who today’s stakeholders are as well as tomorrow’s stakeholders begins the vital foundation of WHO you are planning for. Many have, or at least aspire to have, a multi-generational wealth plan. Even though you’ve created the wealth on your own, you likely have aspirations to pass that wealth on to future generations.
Your next stakeholders are non-familial stakeholders. These are entities or individuals who play a part in managing or enhancing your wealth. A great example is business partners. This also includes any charities you’re a part of and to which you contribute.
Assumptions About Your Wealth
This a big one, particularly for those of you that have already hit your stride with your financial independence, entered the next chapter of your life, or exited corporate America. There are certain assumptions we make about our wealth which may not be helping us keep that wealth. Taxes are a great example. When we go through massive market upheaval, as we’ve been experiencing over the last twelve months and will likely continue to experience into the foreseeable future, your wealth organization needs an upgrade to ensure that any personal or market assumptions you’re making aren’t hindering your wealth management.
Every plan has some degree of assumptions factored into it. A changing market and regulatory environment requires a review of those assumptions otherwise the probability of sustaining your independence for you and your other stakeholders is greatly diminished.
Where are all of your income streams coming from today? Are any of those going to change? For the vast majority of us, our high net worth has allowed us to weather the storm of the last year reasonably well. Presumably, we will be able to continue to do so into the future. But every portfolio has a breaking point. Every income stream has a stress point to it. Understanding where every dollar of income comes from allows you to stress test that income and make wealth management decisions based on that knowledge. The best way to effectively do so is to ensure your income is well organized in terms of sources, duration, tax implications, to name just a few.
Maintaining Your Organization
Wealth organization is a continual process. You may feel like you had your wealth well organized at one point but with time and other life responsibilities, that control has slipped away. Life is happening all around us and we want to spend our time doing other things. And as high net worth individuals and families, having that ability is what you’ve worked so hard for in accumulating your financial independence. But your wealth needs continual organization and oversight to last long into the future. You’ve worked hard to build your wealth up to where it’s at, can you keep the work going to sustain it? Only a well-organized portfolio can allow you to make strategic decisions about your investments and future wealth.
Feel free to reach out to me — I want to hear about your outlook for 2021, how your wealth organization is going, and talk about how you can position your wealth for the future. It’s a brand new year, which means we’re looking forward and learning from everything we’ve experienced before.
To your financial independence,
Listen… I Hear Deals
By: Scot Tyler
Last month we spoke about the negotiation with a note seller and slowing down the process. We discussed not rushing through the negotiation, being anxious to deliver a discounted offer to a note seller where mistakes are likely to be made and deals are rarely agreed upon. Not only do we need to slow down the negotiation so we increase our odds of striking a deal with the seller, but we also spoke about slowing down to maybe uncover additional information pertaining to the deal that might change the direction of the negotiation.
This month I wanted to piggy-back on the same theme of “slowing it down”. So now we have mastered slowing down the negotiation with the seller, having several conversations, building the trust, and preparing to deliver an offer for his real-estate loan. During this time not only are we negotiating on this specific note the seller responded to you on due to your marketing efforts, but we should also be listening for new business.
A few weeks ago, I received a call from a note seller and it just so happened the seller was located in an area of the state I knew pretty well. Actually, I was born many moons ago very close to where the seller currently lives. Immediately I am thinking “ice breaker” to begin the conversation and begin building that rapport/trust with the seller. As the seller and I spoke about when I lived there, where he lives, my family members still in the area, where he works in the area and the last time, I was there etc. I began to listen to his responses. The seller mentions his mother is still living close and is the person in his life that encourages him to get into the real-estate business, owning rental properties. As you probably already know, bells and whistles were going off in my head. Thank goodness I was “Listening” because all I heard was more deals!
Once there was a break in the conversation, I dug a little deeper and commented on his mother still being close to where he lives. “Man, that’s great you are still close to your mom. My mom also lives close to me and the older I get the more I appreciate that. Is your mom still in the real-estate business?” The seller responded with “yes part time as she has converted most of her rental properties into notes now.” CHA CHING! Looks like the mom has multiple notes. 😊
Obviously, when the opportunity was right, I moved the conversation back to his mom and what financial needs she might have and if selling off any of her notes would make sense for her. This definitely opened the door for potential deals. Slowing down the process not only means slowing down the negotiation but also requires slowing down and listening for additional opportunities. On your next call make sure you “Listen – And Hear the Deals”.
Here is a note that came across our trade desk that we recently funded. If you’re interested in purchasing it, email me at: firstname.lastname@example.org
Performing Loan – Doublewide Mobile Home/Land Owner Occupied
BPO $82,000.00 – October 2020
$60,000 sales price with $6,000 down payment
$54,000 / 8.5% / $500.72 for 205 months
13 made / 192 left
Current UPB $52,383
Until next month.
Quote of the Month
“I remind myself every morning: Nothing I say this day will teach me anything. So if I’m going to learn, I must do it by listening. I never learned anything while I was talking.” – Larry King