Be The Bank

007 - Note Spy

April 06, 2022 Justin Bogard Season 4 Episode 7
Be The Bank
007 - Note Spy
Show Notes Transcript

Be The Bank S4 Ep7 - Note Spy

On episode 7 of season 4,  Justin Bogard interviews Czarina Harris.

 Key Takeaways:  

  1. Whatever You're Taught That's What You Know
  2. Selling Experience Not Dream
  3. Note Inc

 Resources and links discussed  

 About the Host

 Justin Bogard – Note Investor specializing in performing Residential Real Estate Debt. He finds deals and acquires them for his own portfolio as well as educates investors while walking them through the process of owning a Real Estate Note!  

  Connect with the Host: 

Speaker 1:

Interested in real estate. How about wealth? Well, they go hand in hand and here you'll learn all about it, about it. Welcome to be the bank, a podcast where we discuss and debate the topics centered around real estate. Investing your host, just in Bogar shares insights into investing in real estate to create real wealth and path of income for you and your family. He'll share stories of real estate investments done, right? Walk you through the process of owning a real estate note , and most importantly, educate you so you can be the bang the bank . This is be the bank brought to you by bright path notes. Now here's your host, Justin . Bogar

Speaker 2:

All right . Welcome to epi . So number seven of the BTA bank podcast, season four, and I have a guest today who is arena Harris. Who'll be on in a minute. And today we're really gonna talk about, you know, how do you really make money in the note business? Um, you do it deal by deal or do you actually run a business? How do you get consistent deal flow? And that'll be the topic of discussion today. So stay tuned. And this episode is brought to you by bright path notes. Miss Serena Harris. I have missed you. Thank you for being on my podcast again. You're welcome.

Speaker 3:

Yeah. It's always a pleasure hanging out with you, Justin. So

Speaker 2:

I , I appreciate it very much. Yeah. This is , uh , I think your second or third time on our, on our podcast here. Yeah .

Speaker 3:

Which is funny because we, we like, you know, we have like spurts of where we talk all the time and then we have like, deserts. Right. So it's kind of like, you know , I just, I just talked to Justin the other day, but yeah. In terms of podcast world, I think it's like probably my second or , but

Speaker 2:

Yeah . Yeah . You are our longest running podcast guest, I think.

Speaker 3:

Cool. I'm , I'm happy with that. That's cool.

Speaker 2:

Yeah. As you know, I've had a couple iterations of this podcast and , um, my co-host for the last se last couple seasons was super E and she just didn't have time, time for me anymore. So she fired me and said, I'm gonna have to do this on my own now. Yeah , no , did it , we we're , we're still good friends. She's, she's really busy in a good way. Good . And she's going really good for her with the short term rental business. So she's doing her thing and then I'm able to, you know , guess like you on for today.

Speaker 3:

There we go. Happy to be here.

Speaker 2:

All right . I know you've been on before our audience , uh , probably knows you a little bit, but I wanna kind of back up and just kind of tell your story a little bit out , you know, when did you kind of get into this real estate world and , and note world, and kind of transition to kind of where you are today and , and what you do to folks? Sure .

Speaker 3:

Well, I, you know, unlike probably a lot of people , people listening, I was never in the real estate world properly. I was always in, in notes. And so, you know, when folks come in, they're like, oh yeah, you know, I , I used to do fixing and flips and I used to do wholesaling, but I've never done any of the , those things. I've just been in notes. And so that's kind of U a unique perspective and yeah , and as long as I've been in notes, you know, you know, you kind of see different cycles and stuff like that. And so even though I'm younger than most of the veterans out there who kind of have the same sort of like amount of knowledge , um, you know, it , it is a broad, broad scope. And so even when we were talking about like, you know, what are we gonna talk about? You're like, oh , you could talk about anything. It's one of those things. So I call myself the note nerd , um , you know , cause it it's , it it's just what it is. You know, you kind of like, I took my glasses off today, but like, you know , uh , I am a note nerd and , uh, so, you know, I I've been around. And, and for the most part, like where maybe some of your folks might know me from is , uh , I used to be the director of curriculum at like a , a very highly esteemed , uh , training company here, it in the node industry. And , uh, then left after I had sort of like established my, my podcast that I have , um , called not Inc , same name. And one of the reasons that I wanted to sort of venture out was there's a , there's a problem with not investors in that they, they tend to come into the business and hit a ceiling. So they'll come into the business and sort of the trajectory is I gotta learn about notes. I gotta learn what this stuff is. And that quickly goes into, okay, I just gotta do a deal. And so they'll do their first deal or first few deals. And they feel like, you know, I'm really getting some experience now. And then it kind of goes awry from there and they don't really realize it, but what happens is then they start learning about seconds and then non-performing, and then how to do this and how to do that and how to do partials. And , and so they start just really kind of giving a , a deeper dive into the education side of it and thinking like, if I know how to do more deals, if I know how to execute more deals, then I'm going, you be able to build the note business that I have in my brain. Right. Everybody has their own reasons why they wanna come to this space. And , um , you know, I hate to tell them, but you're gonna hit a ceiling, cuz what's gonna happen is you're you're always gonna be chasing that rabbit. Like, oh, you know what, I gotta learn this strategy. And that'll, that'll take me to the level that I want to go or I gotta learn the is strategy. And you just kind of get on this hamster wheel of sort of education. So you go from like guru to guru and teacher to teacher. Yeah . And the , the issue is, is that there's not really a space that talks about the business side of notes. It really just talks about the investment side and how to make money. And that's why I call the note industry, like the lucrative hobby, because you're, you're making money. But when it comes to like comparing yourself to like an actual business and, and I'm not talking like you need a bunch of people, but I'm talking about the function of like running a business, you're doing a hobby, right. You do four or five deals a year. That's not a business. Right. Uh , but you're making money. So it's not to doubt UN play the folks who only do four or five deals. But it's just saying like, that's, that's a lucrative hobby. So noting , uh , really kind of focused on how do we fix that? How do we find out how to, you know, run a serious business? And so I sort of like put off my, my trainer's hat and went into like the business world. I got a business coach and all sorts of stuff. And I was like, oh crap, we're not doing any of this in the no industry. Like we don't do , we don't do any of that. Like we barely even talk about marketing. Right. And everybody in business know marketing is like, that's the lifeblood, right. To bring in the sales and bring in the , the revenue. So yeah, I figured, you know, you talk about a whole bunch of stuff, you know, here on the podcast and I'm , I'm sure people enjoy it, but for the folks who really have found themselves sort of hitting that wall, like yeah. You know, I , I , I wanted to be outta my job by now, or I wanted to be full time by now or, you know, I , I wanted to be outta of wholesaling cuz it's on my nerves or whatever. Um , and can't really figure out why, you know, I I've got the answer. I know , I know a reason why, so we can talk about it.

Speaker 2:

All right . So you , you said a couple of cool things and I wanted , I wanna bring those back into the mix and start our discussion here. So you call yourself a note nerd. I , well,

Speaker 3:

I just say I'm a note nerd, but really I'm a , uh , if I go by like not branding and keep that system , I'm a no spy . Right. Um , not spy that's right. Yeah. And I tell people that because , uh , we're such a small niche and I said, you know, like you try to tell people what you do and they're like, what is that? And so it's hard explain. Yeah. It , it really is. So I was like, you know what, instead of like trying to run away from the fact that we are small and sort of an unknown industry, I was like, let's just flip it on , on its head and say like, Hey , uh , the reason you don't know what we do is cuz we're really spies and we keep all the secrets to ourselves. Right. And uh , and that's sort of the , the theme of, of the podcast note ink and , and people loved it and caught onto it. So, oh yeah. Yeah . It's so, you know , it's

Speaker 2:

Great. I encourage anyone that's listening to this to download it. Note ink podcast on any of the podcast directories note ink in note T E I N C, correct . Sabrina does voiceover. She hires people to do voiceovers as well. There's a whole spy , double seven spy theme to it. It's very educational and it's very highly sought after there are, if you're in the note industry and you've been in it for a while , you , you probably know about her podcast, but if you don't, I encourage you to download it. She has three seasons, right. You've done C

Speaker 3:

Three is coming out , uh , this month. So two seasons and then we'll see what happens , uh , throughout the rest of the year.

Speaker 2:

Okay. But yeah, she does a great job. She plans it out. She executes it perfectly. It is a very professionally done podcast. She doesn't, you know, as far as I know you don't ask for any money for it. It's just, it's all educational, it's free and it's extremely entertaining as well. So

Speaker 3:

Yes. Heard you guys done the world's only , uh , spy themed, fictional note investing podcast. Yeah . If you can imagine that, you know, I usually tell people like the first couple episodes, you're gonna think I'm crazy. And then by episode three , you're gonna be hooked, you know ? Oh yeah.

Speaker 2:

Yeah. It's kinda like watching these new Netflix series or peacock series. Yeah .

Speaker 3:

It's what is this? Oh , my episodes .

Speaker 2:

Get into it . Yeah , exactly . Like , so note, nerd meet the note professor, cuz that's what my friend Brian has dub me . No , no . Uh , locally here at the note professor, which you know, I , I don't tout too much, but I had to throw it out in there. Okay. Note nerd and no , no

Speaker 3:

Professor here . Hey , here we go. It's all good. So ,

Speaker 2:

So you said , mentioned ceiling specifically and I like how you put that because I totally agree with you. And I see this every day with people that want to get into the note space or just a real estate space in general, it is essentially a hobby or a pipe dream for them. They, yeah . They attack it with a ton of ambition, a ton of passion. They see what they want . Do they see the outcome? Like, yes, I wanna be in real estate. Yes. I want to be in notes. I wanna be passive. I wanna go out and get a deal. Great. And they get into the mix and then they either fall flat on their face. Yeah . They struggle through it. Or they may come out unscathed very unlikely without some proper training. But yeah, they, they begin to realize very quickly how much this is a job.

Speaker 3:

Yeah. It , it actually is.

Speaker 2:

If you're trying to build this to be more than just a hobby, you need to be prepared to run this as a business. So when I got in the business, I had a couple choices to make, you know, do I want to keep my full-time job? Do I wanna work part-time or do I wanna do this note things? Do I wanna go full steam ahead? So I said, you know, I'm gonna go full steam ahead. Do up in two feet first bought a non performer , brought a performer. You know, I , I learned the hard way, a couple quick lessons about nonperforming pretty quickly. And so I kind of stuck with performing mostly. And I do non-performing, you know, every once in a while and stuff, when a deal comes across, but yeah, you're right. I mean, you hit that ceiling because there's only so much you can do with time. And there's only so much you can do with the knowledge and , and your expertise. Cuz even though this is a passive business by performing loans, there still is some accountability and some responsibility that you have for it. And so for , for me, you know, I had to discover like, okay, the , the core competency things that I can do well are detail things. And so I, I remember that, you know , in , in anybody running a business or , you know , selling a widget or, or what have you, you know, I , I think that note business is , is kind of three things arena . I think of, you know, there's marketing, right? Yeah . There's getting deal flows, finding deals. And then there's also the, a , the disposition disposition of the deals, meaning you are , you need to sell the deals or you need to figure an exit out of them as well. And so I , I , I think of as a three-legged month , you know , you got marketing acquisition and disposition.

Speaker 3:

Okay. That's that's new, but yeah, that , that pretty much covers that pretty much covers everything. And you know, like you said, in terms of that, of that ceiling, you don't really know it's there until you hit it and you don't know why you're here . Um , you know, it's not something that's talked about and I , and you know, seeing that over and over and over, I didn't really say this in my , my intro, but like when I was, you know, director of curriculum, I helped train over 1700 people in the, in the note business. And then I left no , you know, note ink and I'm pushing up against 2000 people, you know, combined. Yeah. Um, so, you know, it's, it's something to see it happen over and over and over. And , um, you know, I say, so you say, you know, marketing acquisition, disposition , um , I say there's, there's two pillars and there's, you know, the first pillar is inventory and the second pillar is investors or your capital. And so we're basically saying the same thing, just two different ways. Yeah . Um, and you know, after that, it's kind of like, well, how do I make this consistent with marketing on both sides? Right. Um, so in , in terms of all of this, it's kind of like, well, what do I do? And one of the things that more recently, so I decided , um, that I was gonna use my sort of like note nerdiness. Right. And, and kind of a , and kind of , I started a , a newsletter actually it's quarterly. Okay. Um, so we, so there's been over the years, there's been some like industry like newsletters and papers and stuff that have come out, some aren't around and some, some still are. Um, and you know, just sort of the benefit of kind of reading a , a circular that's that's part of your industry is really important when you're sitting on the train or you're , you know, in your car, whatever, or you're in the office, you just kind of wanna keep your head in that space. Um, but what I found was like a , not a lot of people really looked at the industry the way that I do. So what it was interest saying , when you said, like you're a detailed kind of person , um, I'm, I'm way more macro than I like to admit. Right. I love the big picture and like seeing what the heck is happening. And so what I've learned is , um, depending on when you enter into the note business, that's the kind of business that you're going to run. Um, and when I say the note business, I'm talking about the cycle that you're in, but then I found out that's not really true, whatever your no guru teaches you, that's what you're gonna do. I mean, like you can't do anything else. Right. And so if you don't know, like what cycle of the market you're in and how would you, you're not in the space. Yeah. Um , and your , your teacher is telling you, Hey, this is how you're gonna run the business. This is what you're gonna do. If those things don't match, not only are you not gonna know it , and you're gonna find out the hard way, but then you're gonna be kind of at a deficit on what to do. So for you in, in diving, in with both feet, you know, and putting your feet to the fire and like finding out very quickly when you do that, oh , crap. I better say a little bit more on performing, cuz that's, what's gonna get the deals going. That's what's gonna get my revenue going. A lot of people don't do that. They just keep running into the wall with NPLS or whatever. Yeah . Even though we're not in an NPL cycle right now, so it's kind of like, that's what they were taught. I'm not faulting anybody. Yeah. So, you know, there's four business models in the , in the note space, there's brokering. Okay . There's flipping, which is , uh , another way of saying this , like a master broker, right. It's arbitrage, you have workouts, which are the NPL side and then you have originations or investing. Right. And so those are the four main like food groups, if you say , you know yeah . Like coming into this space, but, and you can do any of them at any time. However, when you start to think about, okay, how do I make this into a real business? How do I, you know, have consistent revenue? How do I make sure my marketing is, is really, you know, bringing in the deals, you start to find out, okay, this really skews towards performing. Right. And it skews towards selling loans. Like there , like depending on the category that you want to be in, if you wanna be a full time , sort of like serious business owner of a note business, you're gonna skew performing and you're gonna skew towards selling loans. Right. Cause that's gonna give you the revenue that you need because your bills come in every month. Um , it won't be like, well, I'm just gonna stay on the nonperforming side and do four deals a year. That's not gonna work. Right. Cuz your bill, collector's gonna be like, Hey, you still want water and electric and whatever else on you in your house. Right .

Speaker 2:

Our

Speaker 3:

Money, you know what I mean? I can't wait for your deal to come down in , in December. Um , so you know, just kind of thinking about it like that. I was like, yeah, yeah , this is , that's really what you have to do. And how many people really stop and think about how do I make consistent revenue? How do I make 10 K a month every month in my business. Once you have to think about that, then you start to shift and, and look at things differently. And you sort of like went through it hard knocks way and , and sort of like figured it out, just doing it. Um, some people not, not so lucky, You know, they just keep struggling.

Speaker 2:

I I'm hardheaded. So I have to learn my lessons the hard way. It's the only way it happens. Right ?

Speaker 3:

Yeah .

Speaker 2:

So it's, it's interesting to me that , um, you know, offline, we had taught , talked about , you know, a couple different ways people can get into this business. You know, they either have a lot of money. Yeah. Like a lot of money, lot of money , money they get in, they can just run their own portfolio or they have to go out and they kind of have to hustle. They have some money and they can buy some of their own, but they have to build that portfolio and they kind have to build it organically. They have to kind of get their hands, rope , their sleeves, get their hands dirty, little , little bit, start, start , um, you know, calling around, seeing who is interested in being a passive investor and you gotta call around and see who's who is , uh , where you're gonna get inventory from and the inventory , uh , shortage or a challenge that's been talked about across the industry for a couple years now , um, is, is also an , a fun topic to talk about from my per to , because I feel like , um, people are not looking hard enough. I feel like the deals are out there. I feel like the deal, the deals can be pretty sweet, but I feel like they're, they're kind of , um, used to having things, cater to them, whether it's a fun, that just releases stuff. And then they used to have all lot of inventory and now they don't have a lot of inventory to stop

Speaker 3:

Stepping on toes. Justin stopped stepping on toes, stop

Speaker 2:

Stepping on toes.

Speaker 3:

Yeah, man. No , you're absolutely right. So remember what I said, like whatever you're taught, that's what you kind of know. Yeah, Bro. So many people came, I would say this started around 2000 14, 15, 16 era, right. Where you could , you could literally come into the business. Now this is probably like 2016 and moving on, like if I'm, I'm really thinking about it, but anyway, you can come into the business. Right. And not only could you learn about notes from your teacher, but you could also buy them right there. So what it did was one, it , it got you really excited. Cuz then as soon as you learn something, you can go out and look at a deal. Right . Which mentally speaking is like top notch , right? Like, yeah, I can get started right away. Um, but the issue was is that when that goes away, you, I don't have the muscle built up that knows how to find my own deals. Like I just don't have it. That muscle is gone. It's atrophied if it ever grew at all. Right. And you don't realize that until it goes away. And so what you're left with is, I don't know how to, I don't even know how to find deals by myself. Right. I've always sort of been fed deals. I've always been able to go, oh , two , some platform and there were just deals just waiting there. And you don't realize how much of the business is trying to find deals. Yeah. Um , and, and because you're not thinking of that, like you said, like they're easy to find, like somebody would think like Justin's crazy. He's been in it a while. Like of course they're easy for him to find, not realizing there's a, literally a billion dollar I with like 24 billion, right. In just seller financed, private notes every year. It's not like, Hey, we only have a few deals a year that happen like this, no we're happen like 80, 90,000 seller finance , private notes per year that no one really goes after because they don't wanna and money on marketing. And the other half of the folks don't even yeah . Think about it that way. Cuz they're so busy trying to buy non-performing. Yeah . But that's go

Speaker 2:

Ahead. That's that's the retail note investor. I think I , I kind of categorize them as yeah . You know, they go to the grocery store and they pay retail pricing because everything's there for 'em they Don they don't have to go out and figure out where the jellys , you know, at they , the store, the Jelly's there. Yeah. Right. Same thing with no , there's, there's several different places that are just normal sources for people like me to go to. When I got started in 2016, you mentioned that number. So I just wanna throw that out there. That's when I got started in 2016, so there it , it was , uh , there was , it was plenty full , right. There were a lot of performing loans. There was a lot of non-performing loans. Absolutely. And there were a lot of solid deal out there and it was very easy to find notes. So my problem then wasn't the inventory. It was the investor. I had to build up an investor database and then it took me a few years to get things going. Then when I started to get things going, I saw the inventory start to be a little bit more challenging to find at those traditional grocery stores. Right. If you will . Yep . Um , and rightfully so, they're , they're having the same challenges. They're trying to go out and find things, but you're I had to figure out how to flex that muscle a little bit better. Yeah. And when I figured out how to flex that muscle better, I found like, oh wow. Seller financing buying from mom and pop paper. That's a source where no one's really tapped into because you have to work hard at it. You have to have a system, you have to have a process. You have to understand marketing. You have to understand sales, being a salesman. You have to run a , a

Speaker 3:

Business business. Yeah. Right . Absolutely.

Speaker 2:

You were for today business. It's the buzzword.

Speaker 3:

Yeah . No, no. It's true. It's true. And, and so, you know, like you said, when you started to see something happen yeah . Instead of sort of like being a victim of it, right. Like, oh, there's no inventory. I guess I won't do any deals. Right. You were like, no, I gotta find some deals. And so that, so that tenacity and that hustle that was in you, like, I , I have to make this work because I've, I've got nothing else. It's either like notes are bust for you. Right. Yeah. Um, that mentality, it's very hard to have, like when you, you can fall back to your nine to five or, you know, you can go back to wholesale. Exactly.

Speaker 2:

Yeah. That safety net,

Speaker 3:

That safety net. Exactly. When there's no safety net, you gotta make it work. That tight rope becomes really serious. Yeah . And , uh, no, it's , it's true. And so in terms of like, and that's just one area, right? So that's a $24 billion area that's virtually untapped. And, and just to give folks numbers out there, if you go to, there's a , there's a few companies who still buy, you know, seller, finance loans. They , they talk to brokers all the time and they , you know , they send out their own mail and , and campaigns, if you talk to them and you ask them, and even if you ask the guy, who's like the number one guy in selling lists in our industry, right . List of like seller finance, you, you won't get a number above 50 in terms of like how many people are doing this, you ask the, yeah . The , the list guy and he's gonna have a higher number cuz more people will buy a list than , than execute it. Right.

Speaker 2:

Correct.

Speaker 3:

Yeah. Yeah. So, so the list guy will say, ah , it's about 50 people who consistently come back to me for, for more lists. Right. And, and you know, to kind of refresh and the number one buyer says, ah , it's about 35 people who are consistent. We're talking about the entire industry. We're talking about the whole nation, all 50 states, there's anywhere from 35 to 50 people doing it. Yeah . And so what you're talking about is, is a space that is like the unknown within the unknown, right. We're already this sort of niche that nobody knows about, but even within our niche, not a lot of people are, are looking at, Hey, I can go out and get my own inventory. Right. And I probably should cuz inventory is low. Yeah. Um , they're not thinking about it that way cuz the moment that you have to do that, it's like, well, how do I get it? Oh , marketing. Well, I don't know how to do marketing. Right. And so you're forced to kind of learn all of these things , um , and operate the bit isn't this successfully, cuz you don't wanna spend a crap ton of money on marketing. If, if it's not gonna warrant you the return. So you have to make sure that it's actually pretty good. Right. And so you start to think like a business person , not just has a, so note investor's just doing deal . Yes .

Speaker 2:

Yeah. So the , the audience , uh , the listener here, you know, I'm not, I don't wanna poo poo the person that does wanna do a couple deals a year, cuz that's perfectly fine too. Yeah . It's perfect deal . But the , the crux of our conversation today is to say like, you know , if you're trying to get into this to really make money, to generate, you know, legacy wealth and do it at an exponential rate, you really gotta dig in and , and really create a business for yourself. So my , my business model is , is pretty obvious based on today in previous episodes, is that right ? I'm going after seller finance paper. And I have a , a long line of people waiting for that inventory to come to fruition so I can offload it to them. Now of course I'm gonna buy it. I'm gonna fix it. Whatever's damaged to it. I'm gonna package it up in a turnkey way so that they just take it over and they don't have to worry about it. So if they, if they wanting to be in my shoes. Yeah .

Speaker 3:

The , the , the , the people who are waiting to buy these notes from you, are they all private or are some of them in the industry as well?

Speaker 2:

Uh , they're all private.

Speaker 3:

Okay.

Speaker 2:

Okay. Yeah . They're all private. They're all private with maybe I aspirations of wanting to be in the business, but they understand they gotta start somewhere. Gotcha . So I , I get a lot of people that want to work with me , um, because it's kind of word of mouth of someone else that's worked with me and they're like, you know, this is , this is what he does. This is how he helped me out. Mm . And they , they want to know the business, but they know that they don't wanna dive in feet first and do it on their own. They want someone to do it with him . So they're willing to, you know, share some of their profits with me in order to help them learn kind of how those things works . And then after a few notes, they , you know, you start to let go of the leash a little bit, so to speak and they , they can, they can, the line is, is , is casted further out for them to be able to do more things on their own or they just state , you know what, this, I see the type of work that you have to do on this. Not , not that's a lot, but it's just like, I have a time management problem to where I can't manage my time outside of my nine to five job where I'm, I'm an entrepreneur and I'm running a business and I'm a pro and I , you know , a licensed professional doing something, you know, with the dentistry or an attorney or, or something be like, everything's thriving over here. And this is what I like to do. I do like the note side of it. But , you know , I don't wanna learn a new craft. I wanna , I wanna benefit from the passive income. Yeah. And that's what probably nine outta 10 people that come to me, they end up being like, I just want the passive income. I would like to make the monster yield like anyone obviously. Yeah . But I accept the fact that I gotta , I gotta do some more work and take some more accountability to get that really bigger return. And so I'm happy with just steady Eddie and just, and just having that predictability and having that, that payment come in. So that's, that's kind of what happens when , when people work with us.

Speaker 3:

Well, and I , and you know, I find that interesting too, because , um, that's, you know, that's a consistent model for you that that works. Yeah. Um, but even with the shortages right now, there are people who are just in the note space that I'm finding who are like, I'll buy it, you know, I'll , I'll take a lesser return just to have a deal. And so that's why I asked, I was like, are you just working with , uh , private folks? Cause I I've gotten a few emails and, and some contacts from people that are like, we don't have any inventory, we'll buy anything. And again, it kind of goes back to, they don't really know how to find it on their own. So yeah. You know, it's , it's interest saying

Speaker 2:

They, and I , I wouldn't argue that point, but I, I would say a twist to that from my view is that they probably know how to do it or what they should do to get it, but they choose not to because it's the path of least resistance is to be like, okay, well that person's

Speaker 3:

For somebody to bring it . Yeah. Oh , that's a good point. It's a good point .

Speaker 2:

That that's kind of what I, things was going on because I , um, if people are in the note industry and they ask me for long as I'm like , I'm happy to show you my inventory, but I want you to understand that I can sell it to somebody that I've already kind of ingrained into this business at a very passive level. And they're gonna , they're already waiting to buy it and they're buying it at the premium price because I'm setting it up for them because that's what I like to do. I wanna set it up for them to where they really have to worry about it. It's more than likely a strong likelihood. It's not gonna only have a problem. Yeah. Things happen and things do have a problem, but I set it up to where, like, this is , this is a, a lower risk type of investment with a higher passive income because of it.

Speaker 3:

Exactly. I , you know, I try to tell people like we have a really, you know, if you think about it in terms of product, which I hate to use that word, but if you look at it in terms of product, we have a really good product. Right. You have , uh , you have like platforms now where people will send their money through, through this platform to do so some sort of lending P2P lending. And that is in a way it's kind of notes. Right. But it's unsecured. And so the worst that you can do is somebody to pay that back is like give 'em a bad credit score. Right . And hassle them with phone calls for debt collection. That's about it. Right. In terms of notes, listen, this is collateralized by real estate, which everybody knows, you know what I mean? So it's kind of like, wow, that's a , that's a superior product. And so even if you're a passive investor, it's kind of like, well, where are you gonna find something like that? Something where your safety net is real estate. Like yeah . That just doesn't exist in a lot of places. Something that, that can be so liquidous, especially in a market like now. Right, right. Um, you just don't have it. And so you you're really at the advantage if you're, if you're an investor or you're a, you know, just someone who just wants to kind of diversify their portfolio, maybe you have a career and you don't really see a need to come out of that. Right. If you like being a dentist and be a dentist. Right. Uh , but if you're looking for something that's a little bit more secure, I should say, then stocks can't say safe. Right, right. Um, or you just want something, that's not all of your eggs in one basket. Yeah . Notes is absolutely, you know, something that you should look at because it's just one of those kind of investments that are like, man, I wish I could have more of these. Um, because you know, because of how the, how the whole thing is , is set up safety net is like, you know, our, our worst case scenario is real estate. Whereas that's, somebody's best case scenario like a wholesaler, right? Like I really wanna get this property for us. That's like, ah , crap, we got a property. You know what I mean? So , uh , it's, it's, it's definitely something that as a passive investor is a really good investment. And the fact that your business sort of caters , uh, you know, purely around those folks, like, Hey, if you wanna diversify, if you wanna have some sort of, you know, just passive income, I can provide you with that. And that is you knowing your audience, you kind of knowing like, this is what works for me. And it just so happens to be performing. And it just happens to be sales. No, it's like, that's that's business right there. And you really took that head on and really looked at it from how do I provide the best value to people and also getting myself into a position where I feel comfortable doing this full time .

Speaker 2:

It's funny , it's funny. I've always, there's always been a couple of sayings that have stuck with me. It's like he, who has the gold mix , the rules, you know, being the bank . Yes. And then there was a movie I saw and I I'm , I'm not remembering the name of the movie, but I remember the line. I remember the scene and it was about a guy that talked about, you know, I don't wanna own the mine . Like he was talking about like somebody having a big giant, you know, like a coal mine , or like a gold miners , something to where you, you see the aerial footage and you see the, the , the dozer that, that makes the big circle and they dig lower and lower on the ground to go into the mine , to harvest whatever mineral and stuff. He's like, I don't wanna own the mine. I wanna own the guy that owns the mine .

Speaker 3:

And

Speaker 2:

That's kinda how it's being the bank own the house. You kind , you kind of are owning the, or that owns the house. So you don't have to worry about the day to day stuff of being a house owner. You just worry about collecting the debt on it. Because if, if things go sideways, be like, okay, I had this piece of collateral and , you know ,

Speaker 3:

Yeah.

Speaker 2:

Thing I lost collaterals arena is like a Vango because I know that those things are gonna be guaranteed. Right?

Speaker 3:

Yeah, absolutely. No, it's , it's true. So, you know, I, I tell the phrase and I, I, you know, granted, I picked this up probably somewhere in 2012 or so I have no idea who said it, but it, it stuck. And so I'm taking theirs and I'm just gonna make my own. But the , the saying is, is that , um , not investing is what real estate invest as do when they grow up. Right. It's just sort of an advanced sort of level of, of , of thinking about like, how do I invest? Do I really want the tenants and toilet ? So do I , do I just want cashflow and you started thinking about, I just want the cash flow . I really don't care about this other stuff. And that's what notes provides. It's like, it's , it's cash flow . You don't have to go with the day to day stuff. You don't have to be you responsible for the grass being cut and the toilet's flushing properly. And the light bulbs being changed out and all that stuff. It's just kind of like, no , this is , this is really passive. And, and to come into that space back to like, you know, our topic in terms of like running it as a business and providing that you have to kind of know your product in that way. Like, why would someone wanna , I a note from you, why would someone want this? Because that is what you're going to have to pitch to them and get really passionate about for them to say, you know what, I, you know, that, that guy , that gal, you know, she really knows her stuff, or he really knows the stuff I wanna buy a note from them . And, you know, that's why people have such a , a level of comfort with you because you provide so much education and information. Yeah . That they're like, he has to know what he's talking about. I mean, like he does a pot , you know what I mean? And it's just sort of like, it , it , it kind of gives them that comfort. And they're like, you know what? I do wanna buy notes from Justin, because I feel like he's gonna gimme the best deal. I feel like if something goes wrong, he's gonna fix it, or he's gonna know what to do. He's not gonna be like, oh , well, I , I wasn't anticip that . Right . And so, right . Um , it's just kind of knowing who are you? Who are you targeting? Right. Who's your target audience for Justin? It's passive people, whether they wanna be in real estate or not. Yeah. Uh , who just wants some passive income and are ready to deploy some capital. Right. Cause obviously you're not talking to people who can't buy a note. Right. Um, and then, you know, like what's the quickest product you can get to them. Okay. It's gonna be some performing stuff, right. That you can get your hands on sort of like at will . Yeah . And, and close those deals and get it over. You're not selling them. Non-performing like, Hey, you know, they're , it is, they don't know how to work those out. And the , the start and finish to that is such a long window. Like you've been waiting months. Right.

Speaker 2:

It's an unknown timeline. Like, I, I absolutely the people, when they come to me, they kind of have the , uh, they want the sexy thing. Like they want do the , the fix and flipper, flipper, upper type of house, you know, an HGTV that they see that's on a 30 minute episode. And they think like, I'm gonna make a hundred grand 30 minutes. Right. Well, that's it tricked me. And I was a seminar junkie. Yeah. Before I got into the note business. Yeah. It's it's um , it's, I don't steer people in the direction that I wouldn't do myself . And that's , that's why I tell people I'm like here , here's what I would do. And this is the reasons why I would do it. Then you have to do it. I don't suggest you do a non-performing loan as you first known. I suggest you do a partial. I suggest you dip your toe in the water. Yeah, exactly . You kind of find out what's going on the next one, you know, you can buy a full loan or you can get a little bit more riskier, but right . The last thing I want is for you to have a problem and meet , to fix you and for you to have a bad experience in this business, because I love this business so much and so much fun for me that I want you to be successful at it. And I want you to be, you know, at my level, if that's what you want to do, not to thank of you as a competitor, but to think of you as, you know, a partner or a cooperative, you know, somebody, a collaborator. And so I do collaborate with a lot of note investors.

Speaker 3:

Yeah, no, I could tell you, a lot of people got into like our side of the business, sort of the investor side and , and the deep dive only because they wanted to know more about notes just so they can buy them. I was like, you spent so much money just to learn about notes, just so you can be a passive investor. It was kind of, it was kind of crazy, but yeah , at the time there was really no other alternative. You either went all in, in , in , in sort of like the, the seminar path, right. Or you weren't in it. And now with, with companies like yours, you sort of provide that middle ground. Like, you know what, I don't have to be as knowledgeable as Justin is on notes, but I absolutely do wanna put this in my portfolio. And I wanna diversify and sort of being that middle ground , um, is what I talk about a lot. And I, I use examples from other industries to illustrate this. Um, I take Charles Schwab and I take Edward Jones and I say, what do these companies do? They sell investments, they sell assets. It's what they do right. In different ways. And they have their own styles or whatever, but at the end of the day, that's what they do. They sell investments. Right . And I'm pretty sure Charles schwa has his own portfolio. I'm pretty sure the folks that Edward Jones, the them working there, they have their own portfolios, but their main model is selling assets and selling investments. And that's the model that you have here at bright path. You sell assets, right? Doesn't mean that Justin doesn't have his own portfolio. It doesn't mean that Justin doesn't like notes. It just means his main business model and , and means of revenue, right. To keep the lights on, to keep the money coming in is he sells loans. Right. And everything is sort of focused around that your marketing is focused around that, whether that's, Hey, I gotta go out and get some more seller finance notes so I can sell them. Or I gotta, you know, create a podcast or I gotta, you know, put, get a together , right . To get more folks in , interested in investing so that I can sell them more notes. And so when you have that as your nucleus, right. In saying, okay, I know I have to do this thing if I want to be full time . And, and, and don't think like, I'm just saying, oh, you know, Justin's got the perfect model and blah, blah, blah. It is the model there. There's really, there's four things that you can do. Like I mentioned earlier, You could try to broker full time , but you're gonna need a lot of marketing money, a lot of it, and you're gonna need a lot of sales. So what you don't have in sort of the , the overhead you make up for in like, you need a lot of experience in sales and stuff like that. So the way that you make a business work is sales. And when you think about who am I gonna sell to? That's what you're talking about. When you said earlier, when you said like, Hey, you gotta make this organically. There's no real market for people like, Hey, I wanna buy notes. Like, if you go out and you say, Hey, do you wanna be a landlord? Maybe the person will say no, but they know what you're talking about. Yeah . Whereas if it's , Hey, you wanna buy a note? They're gonna be like, what ? No , what , what are you talking about? What do you mean? Note like a notepad. They're not gonna know what you're talking about. You know what I mean? They they're just gonna have a deer in headlights. So you, when you said organically, I was like, people really need to like pause on that part. It is organic. You have to make these people from scratch. And that also, so it goes back to what you said earlier in terms of like, that's the hard work and a lot of people just don't want to do it. Right. And I think that's true. I think that goes, that plays into a lot of why folks sort of hit that ceiling in this business. Right. And they kind of stay sort of at the lucrative hobby level. Um, because there's so much other things that you need to be good at. Not just notes. Like you have to be good at marketing. You have to be good at like presenting and like pitching what it is that you're selling. And then you actually have to know how to put the deal together and close it. You know what I mean? Yeah . So there's, there's, there's a lot of components working with that. And a lot of people are just like, nah , just, just hand it to me. And you know, and so, you know, it's what it is.

Speaker 2:

Well in any industry, right. Doesn't have to be no investing what we're talking about today. Any industry people are typically , um , they're gonna be lazy about it. And , and it's okay that that's the choice. You know, I don't mean lazy in a bad way. I mean, like, you know, it's easy amount of time . There's things that I don't wanna learn myself and I want someone else to do. And that's what I, I choose to do it. And I'm passive with those things. Yeah . But this I'm active with it because this fits what I do. So

Speaker 3:

Absolutely. Yeah . No, it's, it's, it's true. Right. And then the, the, and , and I think that's why when, when you had come in, right. I think that's why the teachers in the space said, you know, I'll just go get the notes. They had the experience, they had the connections and it's something that they could have and did provide to their students, which got their students off the ground in terms of doing deals. So I'm not knocking that per se. Yeah. But there's a consequence to it in that now you don't know how to go and get your own deals. Right. And so, you know, you have to kind of build that muscle up. So yeah. In , in terms of all this , um, since we're talking about business in general, I just wanna give folks like an idea of how important two things are. Number one, to know who you're selling to, and number two, making something that they wanna buy. So before COVID, cuz we've lost like 30%, can you believe we've lost like 30 to 33% of all our businesses? Cause C's crazy.

Speaker 2:

That is crazy. Um,

Speaker 3:

But before COVID, the United States had probably lingering around 27 million businesses. And this is from the , uh , bureau of labor statistics. So 27 million businesses in United States, 16 million of them never reached more than $40,000 a year.

Speaker 2:

Wow. Wow .

Speaker 3:

After that, another 6 million never broke a hundred thousand dollars a year. So you're talking about 27,000,020 2 million of them don't hit six figures.

Speaker 2:

Wow.

Speaker 3:

Right? The reason why is because a lot of the time that , that 16 million , uh , group who can't make more than 40, they really don't who their audience is. They really don't know what the heck they're selling at. All right. They're just like, everybody can buy this widget. It's fine. Who's your audio, everybody, everybody wants a widget and it's kind of like , no, that's , that's not right. Uh , and then the other 6 million who don't break a hundred thousand, they're not creating something of value. Right. So they have like, Hey, I wanna sell girl scout cookies, But I wanna sell it to this, this gym over here. Well that's not gonna work.

Speaker 2:

Right.

Speaker 3:

Right . Because they're trying to get healthy. They're probably gonna be upset with you trying to sell girl scout cookies. Right .

Speaker 2:

You know what I mean? I know you just worked out for like a couple hours, but you know yeah ,

Speaker 3:

Yeah , yeah .

Speaker 2:

You eat these cookies.

Speaker 3:

Yeah . You know what I mean? Like these, and they'll , they'll ask questions, right. They'll be like, is , is there protein in there? Is there something , something, no it's cookies and sugar. It's sugar and flour and good stuff. You know? It's like , no ,

Speaker 2:

If they were a good salesperson, they could sell it.

Speaker 3:

You know? I mean, you know, they , they could

Speaker 2:

That , that's what I'm selling, you know , I'm, I'm not selling a dream, but I'm also, I'm in my experience and my, my product , if you

Speaker 3:

Were , that'd be good. Right. Cause then you'd have to have people coming back to the gym to work off the cookies. You just sold them . That's another that's

Speaker 2:

Another's , you know , that's another topic. Not make a repeat customer, which is a oil customer. Yeah .

Speaker 3:

Somebody could see that, like I'm not gonna sell cookies and desserts to a gym. Right. That, that gonna work. I'm gonna sell it to kids. I'm gonna sell it to, you know, teachers and I'm gonna sell it to, you know, folks who just like sweets. Right. So when they come into the note space, they start thinking I'm gonna sell notes to any and everybody. And it's like, and everybody is not gonna be a note investor. Right. Right. If you have someone who's like, what can I buy for a thousand dollars? It's not your audience. Right, right. Try to get up them up to a partial, at least. Right. Which isn't as much of an investment, but someone who's got 500 to a thousand dollars , that's not your audience. And it's nothing against them at all. It's just notes are expensive. Right.

Speaker 2:

Yeah.

Speaker 3:

And that's not your audience. Also, if you have someone say, for instance , um, they, you meet them down at a R group. That's also really not your audience. Right. Because folks inside of AIA group, usually not all the time, they're usually active. Right. They're active wholesalers or they're active landlords or whatever. So when they're buying notes, they're thinking about how can I do this myself and go around you. Right. Which is why Justin Manley works with passive people that he kind of like has grown up organically from his own little garden. And he's just like, you can't have my people, you know what I mean ? It's , it's easy

Speaker 2:

For me to relate to them. Right.

Speaker 3:

Absolutely. Right. Right . So even then you can get even more narrow. There are folks who literally have careers being airline pilots, and that's all they sell notes to it's cuz they understand the language of that person. They understand airline pilots have to retire after a certain point. And you know, aviation is great. It's a passion of theirs, but they're terrible investors. And so they, they have these self-directed IRAs that they haven't done anything with. And so there's like they know that audience and they, they cater notes. Not that you're changing notes, but you're positioning it in a way that it's suitable to this audience. So if you're just saying, well, anybody with $50,000 can buy a note for me, that's way too broad. You need to like narrow it down. Yeah. And that's the trouble with the 16 million group and the , and then the 6 million, the , the folks who never break a hundred thousand, they don't have a consistent way of selling. Yeah. Right. So you might have like, yeah, I actually have folks like, I , I wanna specialize in and selling notes to them, but if you're only selling two, three notes a year, it's not enough, how can you make that consistent? How can you bring marketing in and bring in more, you know, exposure and , and expand your network to have more deals to sell them. Right. And so those are the two main things, right. That you have to kind of look at that's business in general, right. Because all those 27 million businesses, they're not note businesses that's in general, most people don't know who they're selling to and they don't know how to create value and then get it consistently .

Speaker 2:

Great point Zina . Thank you so much for being on our podcast today. We're just about out of time and I'd like to switch it up real quick and to talk about something a little , a little bit different here, not really talk about, but kind of give you a chance to, you have a lot of experience in the note business, you have a lot of experience with running a business and helping other people run a note business. And so , so , um, not real estate specific, but is there like a really good book or really good podcast that you currently or have listened to in the past that really helped you kind of, you know, quickly , um , make this foundation that you have and understand, you know, what, what the heck is is to do with running a business.

Speaker 3:

Very good questions. Um, so in terms of podcasts, I can't really recommend too many of them because I , I mainly listen to fictional stuff. Um , so hello from the magic Tavern is , is really up on my list, but okay they're gonna , like, that's not gonna help me with business. No, it's not to help me with mine. Um, but in terms of books, I'll , I'll tell you like one book and people recommended it to me for years and just , I was like, ah , yeah, you know, maybe one day I'll buy it. Uh , the EMyth , uh , by Kerber . I can't tell you how many people told me, like yeah. Zini you should really read that book. Cause you know, you kind of have like this, this mindset of systems and stuff and I'm like, ah , yeah, yeah, yeah. So when I finally bought it, the eith revisited totally changed even the way that I even do stuff at not Inc . Yeah. Right. So that would be one. Um, another one would be , uh , by this guy named Jarvis. I think his name is Paul Jarvis. Um, it's called company of one and that's really important for, for noted investors to really see, because he talks about deliberately keeping your business in terms of like overhead really, really small. Yep . Um , but doing as much business as you're comfortable with. So , um, uh , an example would be like Instagram. When they sold themselves to, to Facebook, they had 10 employees and they said for a billion dollars , right . That's incredible 10 employees. Uh , and that included the CEO and the founder and all that stuff. Right. And Craigslist, which everybody's like, oh, Craigslist is dying cuz you know, X, Y, and Z Craigslist is still around. Craigslist makes $50 billion a year. Oh

Speaker 2:

My God,

Speaker 3:

Is it 50 billion? I mean, they make a few billion. It's probably not 50, but it's a billion dollar company and they have less than 50 employees to this day. It's 20, 22 . They have less than 50 employees at Craigslist and they make billions of dollars. So Paul Jarvis talks about how do you have company that is small, but super efficient. And then how do you, how do you make sure that you're not expanding in a way that's just really just your ego, right? Yeah . If you can run a , a , a serious business with five employees, you don't need 50 to make, make it seem like you're the big man on campus. Right. A lot of that is just ego. Right. Um, so there's that. And then the third one is actually , um , by Napoleon hill, it's not thinking grow rich. It's actually called the law of success. Oh , okay. Yeah. So that's the one that he wrote before thinking grow rich, thinking grow rich is sort of like law of success, like truncated, right? Yeah. Um , I got that recommendation for a guy who said he read that book and he read another one. I forget the other, the one he read. Um, and it changed his life. And he turned around and made , um, made a , a membership. Like he, he helps like, yeah , Christian, Christian folks, specifically men like work out their lives. I have no idea exactly what he does, but he charges $5,000 a month and he's got , uh , like 2 million in revenue per month coming in.

Speaker 2:

That's incredible. I

Speaker 3:

Was like , uh , whatever books you're reading, I will read. And he was like law success by Napoleon hill. I was like, yeah, let's , let's make a note of that. And , uh , he has zero churn. I was like, you have, I was like, nobody's jumped outta your program. He, no . Yeah . So here's a guy running 2 million in revenue and he has five virtual assistants and himself.

Speaker 2:

That's awesome. Right . So we'll name that book again .

Speaker 3:

It was called the law of success by Napoleon hill.

Speaker 2:

I think that that's gonna be our , our in our show notes . Did the law of success by Napoleon hill? Yeah. All right . Thank you so much for being on our podcast today. This episode number seven with Mr . Arena Harris, and then quickly, how can somebody reach you if they want get ahold of you and, and kind of sure .

Speaker 3:

So you can find me , uh , you know, I really am not on a lot of social platforms. You can find me on noting.com, sign up for our newsletter list there. Um, noting podcast, same name and OTE. I N C uh , we're on Spotify, Google play iTunes. And then , uh , you can follow me at note Inc media on Twitter.

Speaker 2:

It's always a pleasure to have you on the podcast. Absolutely . I appreciate all the conversations that we've ever had. And I know we see always are longwinded with each other too. So those podcasts went a bit longer today, but it was fun. I , I wanted to , I once to go further, I wish we could have gotten to more topics, but we'll probably have you on again, just come back kinda further explore. Just , just stay on, just stay on for the next episode. All right . Right . Everybody. I'm Justin , by the bright path notes it's brought to you by episodes brought to you by bright path notes, right ? Episode number seven, and we will see you next time.

Speaker 3:

Bye.

Speaker 1:

Thanks for listening to be the bank. We hope you learn something from today's show. If you enjoyed this episode, please rate and review us. Plus check out our bright path notes channel on YouTube and follow us on Facebook and Twitter at be the bank and on Instagram at be the bank podcast. Be the bank is sponsored by bright path notes. Thanks again for listening.