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this is the no closer show where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property for pennies on the dollar get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same now here's your host ceo of we close notes scott carson good morning good afternoon good evening everybody welcome to this episode of the no closure show as always scott carson excited to be here today we are living obviously in some strange times everybody i think we all can agree to that with uh obviously corona and covet and all my good stuff and people working from home or people still trying to figure things out out there and i'll tell you there's no other group out there that's probably struggling more than bankers right now and you're like why are they struggling you know i'm talking more about on the lending side obviously the special asset managers the secondary marketing professionals over the last few months if you guys have been around you've known that we've been making phone calls to asset managers usually at least once a month usually on wednesday or thursday and we're you know spending five hours at least four to five hours on the phones making you know dialing for dollars calling asset managers so you guys have been a part of that if you have not used callingbanks.com to get signed up for the next one we do and it's become something that we used to do a lot of years ago or we would literally you know that's what i got started doing was dialing 50 100 phone calls in a day starting at 10 a.m and working all the way to five six o'clock at night so that was in the west coast starting early for the east and then rolling through just printing off a list off of lane guide and and getting rocking and rolling well we've had some interesting conversations with these asset managers at different banks and obviously we've used a variety of resources lane guide we've used about our financial list i've used my email list as i blast out uh emails to asset managers from there and calling from those that have opened so we use a variety of sources in a variety of legion when it comes down to it obviously we use linkedin to connect with a lot of asset managers still we've done a variety of email blasts and phone calls and linkedin throughout these you know calling but uh banking blitzes i should say now what we have found is we've had a pretty good high success rate on the phone calls we've made of actually getting into and either getting the right person's name and email address to who handles it for the the leading institution of the bank that we're calling on along with getting a lot of conversations we're actually getting quite a few uh callbacks from people uh providing information to us of either oh hey i'm not the right person but this is the right person or b we don't have anything currently but please call back that has been the number one overwhelming thing that we have heard from asset managers who actually called is like hey i don't have anything right now or i can't move anything right now until we get to beyond december 15. now we're still roughly two months before that executive order expires that the president was put in place for you know evictions and foreclosures as we get close to seeing what the new numbers come out as far as defaults here in october for last month for september or august we i expect those numbers to increase but bankers are literally like well i can't do much right now until we get closer to the end of the year and that's why it's important if you're listening to this if you're an avid listener to the podcast first and foremost thank you if you watch our subscribe to our youtube channel we closednotes.tv thank you love the comments love to hear from you is that hopefully you've been putting some seeds in the ground hopefully you've been planting some relationships you've been doing some work to market your business over the last couple months as you've been at home and maybe not been able to travel or do the things that you normally do because that's the number one thing like i said bankers are open to phone calls they may not have something now but they know they're going to have something i had an interesting conversation with a gentleman who's a front a uh bank that we called in florida and he's like it's it's not going to be quite as bad as 2008 910 but we're expecting to see a lot of stuff and his institution is financing a lot of smaller commercial loans the sub five million dollar category that we've talked about a note nation uh on all the webinars we did regarding the different cities out there that's the number one really kind of overlooked asset class by wall street but it's what a lot of the banks of finance and what falls into a five million dollar uh asset or below well that could be a hotel that could be an apartment complex probably not going to see too many apartment complexes but i would say more like student housing okay you may also see um strip malls big box stores uh self storage you'll see some of that in there below five million but that's where and then you'll have office space you know medical office will fall into that smaller stuff you have a lot of great assets that fall in itself 5 million category that wall street's not going to look at because it's too small for them as they say you know it's hard to believe 5 million is a small number form but it is so conversation has been very much like hey i don't have anything right now but i'm expecting some so please follow back up with me so i had a great conversation with an asset manager that called back uh i talked to him on friday just a couple days ago he was calling returning a phone call from wednesday and he said the same because we've got a lot of we got a lot of the government insured stuff now here's the thing between the residential and commercial side there is a lot of banks with non-performing you know fannie uh fannie freddie jenny you know fha stuff that's been insured by the government that they haven't got payments on for six months and the banks you know will sell stuff off and the question is well do you need to be government insured to buy it from us and what does that mean well when somebody says do you need to be if it's something that's not government insured that means they just finance it's on their portfolio um i'm glad to buy those all day though that's the actually easier thing you don't need to have a special servicer who's licensed uh who can um take down the government back to government church stuff that's the thing with fannie and freddie there's a lot of the servicers out there that work with investors like you and me smaller investors i guess you could say the onesie twozies that a lot of you guys are starting off with um your sourcing of a servicer is gonna be different than probably who you're used to using it's not going to be the fcis unfortunately madison management that we love and recommend they they don't they're not capable of servicing fannie and freddie loans they're just not they don't they only gone through the hoops to get government be able to do that with government so you've got to find somebody now we've got a source that we reach back out to that they are capable of servicing those government-backed loans and so that's we have our servicing in place to get that set up when we do buy as we get to the fourth quarter here so that's what i'm trying to get to you guys out there as i'm kind of wandering this a little bit this episode is hey hopefully you're planting seeds hopefully making contact because the banks are open to it even if they don't have anything right now even if they don't have anything that they can move this quarter they're still taking phone calls i will tell you that there's been interesting i've had more phone call callbacks than i've had beforehand as as people like yes or they're responding to the emails or spotting on linkedin and go from there now here's the thing i know a lot of you guys are probably listening to this is they're getting back to some sort of normality going back to the gym or starting to go back to work so your commute times are starting to pick back up again so you listen to the show first and foremost stay safe secondly if you're following that category we don't have a lot of time the easiest thing for you to be reaching out to asset managers is just jumping on linkedin doing a search for secondary marketing manager or special asset managers and just going down the list that pops up of banks landing institutions now the ones that we have seen the most engagement from have been those that have obviously a profile photo there's a lot of people that uh the profile on linkedin but they're not on it they're not spending time on it and we as we're searching here's what you would need to do i still make note of who that those individuals are now i'll send them a linkedin invite knowing that they're probably not going to ever respond to it but knowing that i have a name and somebody i can name drop if i do have time to call banks and that's come in handy uh definitely as i am reaching out to like one of the things we did this last week is we went on and pulled our financial list and then we said okay let's go let's target banks over 100 branches so we just started with banks that had 100 branches and that went up from their 50 banks is what we pulled for the list sorry for dollars and that was one of the things while we're looking we look at i'll jump on lane guide see if they have a special assets department online guy for the specific bank by doing a name name search online guy but then we also jump over on to linkedin and we'll do the same thing bank bank name special assets and then we'll often pull up a list of people that work for the company or we'll do a search for company and then click on linkedin where it will list the number of employees of the employees who are on linkedin who say they work for that bank lending institution so that helps us find some names find the right person that we need to reach out to besides just the president's name or the ceo of that bank who's which is what bauer financial provides they also buyers can provide you the one the normal customer service number which is not what you want to call unless it's your last hope to find a contact now you always want to call the main corporate office and i highly recommend calling before five at four o'clock their time we start getting beyond four o'clock usually if you're calling the main corporate office it's not going to give you the uh a lot of those people aren't going to be around after four o'clock they're often taken off or doing other things so as we roll into the fourth quarter as this is obviously the first month of q4 2020 i will tell you this here's what's going on at the banks behind the scenes they're looking at their portfolios they're trying to determine who's naughty who's nice on their portfolios they are evaluating those lending relationships with those that have you know established relationships with the bank you know they got their mortgage with them do they have their car do they have credit cards with them did lines of credit and i i will tell you this is what you're going to see if a borrower just has a loan with a bank but doesn't have checking accounts savings accounts unless we're talking banks we're not talking about lenders there's there's two things you have lenders out there that are originating loans they don't have a checking account like that's a different different relationship what i'm talking about is physical banks that have the big bulk of stuff there if an individual has a mortgage or a business loan business mortgage and they don't have that lending relationship they're going to push hard to get those other lending relationships you know like i said personal cards credit cards whatever they can do checking cap because that's one of the things that banks will do they'll look at those and say okay we want to try to control everything in a bank i say this because this is what we were sold on and train when i was working for bank one and jp and chase is they want you to develop those other relationships as best you can does this person have a business let's try to get their business banking do they have a merchant account do we need to direct their merchant so the relationships with those borrowers that have more than just it alone with them they're going to hold on to they're probably especially if they're the naughty borrowers that don't have a relationship with them they're probably going to be looking to move those off their books if they can especially if they're in forbearance agreements they should have not paid um anything if they've been dragging things out now the thing about banks is we've talked with our buddy merrill chandler from creditsense is that banks can obviously pull credit if you've got a loan with them they can pull do a credit soft pull to see how you're doing with other things and i encourage you go back and listen to the episode with merrill chandler if you haven't had a chance to yet about how and what shows up on a borrower's credit if they stop paying and if they're going through the different strategies of either being forbearance or behind short sales or defaults that kind of stuff it affects obviously your credit scores it also affects relationship across the platforms we all know that credit card companies can automatically drop your available balance they can drop your lines to reduce your lines of credits depend what's going on in society we've seen that happen haven't had that happen before on a vacation and everything's hunky door and suddenly i got 10 000 less than my credit card than i had to begin with because something just happened not anything i did but something just happened in society or other things um and banks will do that credit card companies will do that to protect themselves because they don't want people going up and running up their lines of credit in a rough time would probably don't have the ability to repay it back so banks will evaluate the borrower's portfolio that they have as far as products with the banks and look to really establish this now those that don't have a lot of relationships and those are the ones especially they going for bearings they'd probably be willing to look to move to get off their books just because they have fewer other ulterior ways of helping trying to offset those losses now we do uh coronary marrow a lot of banks been reaching out and approving lines of credit for their here you know they're a tier top of the line borrowers out there because they're like okay you've got this let's encourage you to go spend some money so we can offset some of the losses from the other side of the bank it's literally i almost want to say it's like the bank robbing its own peter to pay its own paul okay they're like oh we're having trouble over here let's go over here and offer up these great terms great lines of credit to these responsible borrowers hope they get to use we can use some of those fees off that to offset some our losses out there now as we get into the later part of october here first part of november as we start getting new fdic reports filed uh from the different banks out there it's going to be interesting to see what percentages of their from the previous reports previous filings that they're 30 to 89 daylights how many of those have moved into the 90 plus default rates 90 plus default loans uh you know we predicted that we'll see a lot of these banks that have a percentage a pretty large chunk of 30 to 89 defaults or lates moving into that stuff and really compounding the issue hey are they going to get the stuff off their books in the fourth quarter are they still sitting there waiting to see what happens are they hoping a government bailout's going to happen and honestly with everything being pushed probably on a stimulus package to after the election that doesn't breed well for banks for the most part now obviously the elections first part of november the executive order ends december 15th do i think that'll get pushed out to next year i actually do think it's gonna get pushed out because people uh banks i don't think i start following foreclosures december 15th for the holidays not only will uh a lot of the counties and judges aren't there aren't going to be bad bad man in the year i just don't think they're going to do that and now you're going to have some that happen you're going to have some evictions definitely happen others people don't follow through what they need to be following through on and it's just it's a tough time i think you're going to see more people coming together you're going to see some families kind of tightening the belt multiple families living in the same household we've seen it happen before 10 years ago and the things that you're going to see here opportunity lines as a note investor is the ability to follow up follow-up follow-up because we've talked about this before and you've just got to follow up with the banks start education talking to them i mean we've had some great conversations i said before hey what's going on how are you guys doing you know i know that we can see on your reports you know let you file your bank following if you see you've got some non-performance stuff i have one bank that said say well we don't have anything i'm like no offense i know you have stuff on your books you may not have on the commercial side what you're talking about i know you've got stuff on the residential side who do i need to talk to about that that's the thing you keep in mind a lot of times if you're reaching out to bankers they may just handle the rezzy side they may not handle the commercial side or vice versa they just gain a commercial and may not deal with anything on residential side so each bank if they're doing loans residential or commercial loans both you got to keep in mind you're going to have at least two if not more contacts when it comes to being the person in charge of special assets now talking about making transition you're talking about lending institutions not banks but your loan originators out there your mortgage bankers are just lending and looking to sell off they're originating a heavy pace and selling stuff off now obviously with the fha defaults being ridiculously high you know south of uh just barely south of 17 i'd expect that to be over 20 25 when the new numbers come out here in the next few days yeah 25 defaults on fha loans that originated in the last 12 months that's not a good thing that and that's the thing that i think drives more so some people like oh we're not going to see a downturn like you can't help but see a downturn in specific segments now some cities you're not going to see a big downturn because there's a lack of inventory so even something comes on the market that was originated this year where you have a distressed borrower i believe the banks will be willing to approve short sales or this lack of inventory may be able to sell that property still even with an increased appreciation going up a little bit in six months it's hard to say that but i think you're going to see it the bigger impact isn't going to be in your top big cities like here in austin or houston or new york i mean i think new york might be a little bit different because people want to get the heck out of gotham but some of these bigger cities you're still having people feeling like you're looking for housing people that are can afford higher end stuff it's the low end stuff that outskirts your rural communities uh i think you're going to see another wave in the midwest again as people just don't have as factories and industrial jobs have kind of slowed down a little bit people aren't working as much in those areas manufacturing for sure you're going to see a big downturn because there's no other place for these people to go for jobs especially around the university areas in indiana ohio illinois michigan um and i'm talking well i am talking about major universities because a lot of you have to look at what's going on with the major universities are they doing all online classes or are they allowing for students to come in in person now if you have in-person classes you've also had this big wave of secondary wave of people catching covid and then they're shutting down and trying to you know i think we're going to be dealing with this for another six to 12 months through most of 2021 i hate to say that but it's just when everybody hunkers down and then you go back out you catch it then you have to hunker down again it just delays the inevitable stuff so these lending institutions that have originated loans in and around college campuses and this is where i think your college campus or your student housing you're going to see the biggest defaults with that i think it also makes sense where you're seeing hotels struggle around universities because they don't have the ability to have kids and people and fans in the stands all right um i think what they were saying that that like pittsburgh even with the nfl teams they're known only allowing about a quarter percent of what the stadium is holding to be there well let's that's better than none but that still leaves a lot of people that aren't coming in they're not traveling they're not booking hotels they're not renting rental cars they're not doing those things eating out at restaurants as or you know at bars depending on the air if they're open or closed or take out stuff like that now you have some that stuff opening but still not the same amount as it used to be so it's those going to be those secondary markets outside of your major cities that i think are going to struggle the most and i think there's opportunity there if you can buy right there's opportunity there um you just got to really know your numbers know what the rent rates are because if that's you something you're looking at doing buying that may be your strategy yes our goal is to always modify the loan first but it all can come down to hey what is the borrower doing what can they do for work are they going back to work i think those jobs that are in our i guess you could say service industry the sub 25 and our employees you know those are the ones that are hit giving hit the hearts because they don't have there's just such a flux uh of waiters and bartenders and service industry staff hotels staff housekeeping kitchen um i think of the amusement parks of a lot of people when you look at what you know disney's talking about permanently laying off more people that's going to be primarily in california but i also think it's a lot that's going to happen in florida so as long as these individuals you know you i'd say 25 bucks an hour and or less they're the ones that are your first time home buyers they're the ones that are taking out the fha loans to get into their first time home and if you're in an area like florida i think is going to be hit extremely hard i don't think you're going to have you're going to have the halves and a half knots more than anything else the halves in the major cities are going to still be keep rock and roll and they're fine they've got their abs they have their online businesses or they'll be able to work remotely high-end stuff san francisco san diego they've embraced the technology it's those that don't have not embraced it that is much more one-on-one or service industry that's what's going to struggle the most so taking a look at those industries taking a look at those lenders taking a look at those those properties especially new build areas where it's that higher foreclosure rates that's one of the the the trends that we tracked through note nation the donation top 40 tour was that when we looked at realty track and the foreclosure trends were all the peaks were all in that 200 000 or less price point range first-time home buyers 200 000 or less you know all across the country all 40 markets i'll take that back except miami beach which was a million plus they didn't have anything below 200 000 miami beach that's the one exception i'll throw out there for you but that leaves an opportunity as well high-end condos on the opposite side and tour stuff are also being hit hard as people are not paying you know their rent they're not paying their mortgages hence they're not paying the hoa so you're going to see an influx of that it'll be interesting to see how vegas responds orlando miami um how a lot of those touristy spots respond now obviously some people like oh my airbnbs are doing well well if they're in a major spot that's a non-major market like that yeah you're going to see some especially around the new yorker people have just said get the heck out of i get i want to get out of the living in the major cities moving to somewhere where i actually have a house instead of a condo that i can work out over the yard or something like that you're gonna see that so if i were you guys out there i would be targeting banks and land institutions in around the university area if you see something that's growth wise and growing i would be tracking foreclosures i would be tracking if you can go to the county appraisal uh county clerk's office and looking for your list pendants which will probably not happen until probably later on in this quarter of the appointment of substitute trustees you'll probably see a big rash of those that's coming in texas here um we have that's our pre-pre-foreclosure list as banks start filing a substitute trustees to start the foreclosure process um foreclosures aren't going to take place probably till january and that's the thing you got to keep in mind even the earliest fastest states that's what's going to happen with their other states it's going to be the trickle-down effect depending on how long a foreclosure process is and in a lot of cases if somebody's got an fha foreclosure that's at least a 12 month process 12 to 18 months process once think filings take place now one of the things you need to be careful of i want to throw this out there this is very important you got to be careful of i've seen this happen and some of the same idiotic people i probably shouldn't say that but what the heck you know me i don't pull punches they have a list of notes they're trying to sell and they're really trying to spruce up the fact that oh they're going off of there's some equity there and by equity value the property currently is above what the unpaid balance is plus the legal balance the back payment so their legal balance they're trying to sell the notes at above the legal balance now that can make sense depending on what that percentage is and percentage to value okay but you have to be careful about this because the thing is to look at is i i'm not seeing a lot of legal updates since may out there so you have to really know in your due diligence if you're going to look at buying one of these notes now from a fund and they're talking about it's a foreclosure hey you need to talk to the attorneys talk to the attorneys the legal counsel handling this i know we're stuck until such and such date how soon after december 15th can we proceed was this already started prior to covet is it different in this county so it's a different i mean you should all basically if you're buying notes anyway be contacting legal and talking the legal side but still knowing where are they at what the county is doing what's going on with the judges in that area what's the state doing we always take it over but also hey well when this expires if this was started prior to covid are we able to continue this or is it basically we gotta wait to jump through some hoops so that's important thing but the conversations like i said i'm having with bankers bring it back to that they've got this stuff in their books they're just basically kicking the can down month to month kicking it down the road to the end of the year and they know that their stuff that they're going to have to move they're just waiting to see what's going on just like all of us so the most valuable thing you can be doing most valuable things whether you have the time to put in a couple hours a week or you know pull one day a month to dial for dollars or if you're stuck and you only have online access don't have time for dollar for dollars is setting up your contacts setting up and reaching out on linkedin to make connections with people and trying to engage and hey i'd love to talk to the person or if you got a chance would you have to be able to pick up the phone and talk about what you guys may be looking to move this quarter the more conversations you have the more invites out on linkedin the more messages you can send it's important don't just say connect it the higher value relationship that we have seen develop in the last 90 days have come always from the fact that we hit them if we minimize we hit them on linkedin if they had a photo great they were on there if they only have a couple hundred contacts or less and they're probably not using linkedin so it's still worth sending an invite to in a message but looking at who's on linkedin connecting with them there trying to reach out and use that hot name when you're calling the main corporate office the main switchboard operator using um lane guide or something else to try to contact them directly just follow up people you have to have patience more than anything else dial for dollars and just follow put a system in place and follow up follow up send an email to them follow up with an email put a list in mailchimp or something else that you can use that's easy enough for you to mail out to on a regular basis and just drip market hey greg just wanted just wanted to follow up with you this month just wanted to follow up with you this month just want to follow up with you now that the number's out it's so important um last monday night we talked orders yeah it was last monday night we talked about that there's roughly 13 weeks really left in the year okay really less than that and you really need to know what you can do on a weekly basis just a weekly touch base with your asset managers because we've got obviously you've got halloween you've got thanksgiving you've got uh christmas the holiday season with uh hanukkah and kwanzan and you've got new years you've got a lot of stuff that can be prime content to send out just wishing people happy this happy that just want to touch base just one to touch base just one to touch base there are deals out there and there are banks are looking to move we've got students that are getting tape sent to them already from their marketing it's just a matter of their sticking to and doing exactly as we teach them how to do so big important thing guys and gals reaching out to banks following up engaging in conversations whether it's via email via linkedin the old-fashioned on the phone dialing for dollars so if you need some motivation hey plop on the wolf of wall street or the boiler room or the pursuit of happiness uh so all three great movies to watch to help you get a little motivated when you're down for dogs because that's really what it all comes down to here in anything in the note business everybody still build those relationships with sellers and get rocking and rolling for you in the new year but go out take some action everybody and uh if we can help you anyway feel free you can always schedule a phone call with me by going to talkwithscottcarson.com that's talkwithscottcarson.com they'll take you directly to my calendar pick out a 30 minute time slot i'll be glad to visit with you uh advise you and instructions you gotta love to talk about what your focus is what your background is in real estate and you got some questions hey schedule call with me and you can pick my brain and we can go from there but i always love helping investors students whether you are you've attended one of our workshops or you're just an avid listener of the podcast i want to hear from you so that's it go to talk with scottcarson.com that's talk with scottcarson.com and we look forward to seeing you on top everybody bye [Music] you