Be The Bank

026 - Last Episode of the Season

December 28, 2022 Justin Bogard Season 4 Episode 26
Be The Bank
026 - Last Episode of the Season
Show Notes Transcript

Be The Bank S4 Ep26 - Last Episode of the Season

On episode 26 of season 4, Justin Bogard and Richard Thornton talk about Facebook Groups and back office issues!

Key Takeaways:

  1. Don't get your advice from FaceBook Groups
  2. Notary Blocks in GA
  3. The Fund is inked

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:

Narrator:

Interest 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, Justin Bogart, shares insights into investing in real estate to create real wealth and passive 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 bank, your bank. This is be the bank brought to you by Bright Path Notes. Now, here's your host, Justin

Justin Bogard:

Lou, everyone. Welcome to episode number 26, brought to you by Bright Path Notes. And today I'm be talking about some things that I see on Facebook. We'll be talking about some problems in Georgia, and we're gonna be talking about some back office issues that you can probably avoid. Stay tuned. Second time this year that I've done that, Richard?

Richard Thornton:

Yeah.

Justin Bogard:

Pushing the wrong button. Looking at the camera. Yeah. Those of you that are just listening to this podcast, we do record the video of this on our Bright Path Notes YouTube channel. So come check us out. Episode number 26, brought to you by Bright Path Notes, but I had clicked the x the outro video. Uh, I think<laugh>, if I mistake, instead of the, uh, the little, uh, transition break, the little six, seven second video there. I'm supposed to. So, hey, it happens.

Richard Thornton:

It happens.

Justin Bogard:

<laugh>. So how are you, dude?

Richard Thornton:

Great. Uh, it is a pretty day here in California. It's actually getting a little bit warmer. Warmer for us means that it's, uh, north of San Francisco. It's going from a 55 degree day to 60, which I realize is blazing compared to where, where you are. But, uh,

Justin Bogard:

Yeah, we're getting ready to get minus temperatures for three days in a row.

Richard Thornton:

I understand you guys are, what are they calling it? The big blast or something like

Justin Bogard:

That? I don't know. I don't know. But I, I do need to get some groceries, uh, just because I will prefer not to travel outside the home office, um, during those times, Richard, uh, in an opening little segment there. Oh, by the way, how are we in the same house with the same stuff, but we're not next to each other. This is so weird.

Richard Thornton:

Well, you know,

Justin Bogard:

<laugh>,

Richard Thornton:

I got a new piano, dude, I don't know about you, but,

Justin Bogard:

So if you guys are listening to this broadcast, check us out on the video because we're actually have the same virtual background today. It's kind of funny that we just have the same one, so it looks like we're in the same location, but we're really not in the same location. So this is the fun thing about doing this stuff virtually, right, Richard?

Richard Thornton:

Mm-hmm.<affirmative>.

Justin Bogard:

So, dude, I have been looking at a few Facebook groups and posts, uh, recently just because they come in my feed and I, I casually look at note groups and other note in, uh, investing pages. And I also look at, uh, regular real estate investors and there are more and more of them today that are getting back into creative financing and offering, uh, to sell houses on terms, right? Carrying back seller financing notes. And there's a few of'em bragging about, um, what they're doing and, and how, how, you know, easy it is and the cash flow and they're posting their numbers and their situation. And I'm kind of skimming through it just cuz I'm just kind of curious as to, you know, how, how they're setting up their stuff and it's just, uh, you know, you can tell that they're not seasoned in the business because there's, uh, you know, several mistakes that they're making and a couple of, uh, you know, s e c type of files that, that they're doing with their posts and stuff. And I just, I just get a good chuckle out of it. So I just want, uh, buyer beware if you're getting your information from Facebook or if you're getting for information from somewhere where it's, uh, a free source that's somebody that doesn't, uh, make this lifestyle their expertise, you know, don't necessarily take that as the Bible as to what they do as the compliant in the right way. Uh, you definitely wanna get in front of people that actually do this for living full-time. So that's kinda my little soapbox there.

Richard Thornton:

Yeah. You know, Justin, another good example of that is, is I flipped about 20 houses, as I've probably told you. And that's, that's not a lot, but it's enough to sort of know the ropes, right? Right. And, uh, I had to kind of smile when all these HGTV shows would come on and they were talking about how they got into the house and, and, uh, uh, did all the renovations and got out in 60 days and, and you know, blah, blah, blah. And they would go down, uh, what they were spending their costs on and, and things like that. And it was just kind of funny because things like permit costs and um, transfer fees and things like that, were just sort of left outta the equation, right. Uh, when they're figuring their profitability. And so this, what you're saying is sort of along the same line, which is the Facebook crowd tends to run a little bit fast and loose. Yeah. And buyer beware. Consumer beware.

Justin Bogard:

Consumer beware. There you go. Consumer beware, viewer beware, listener, beware everything. Beware, right? Yeah. Right. Just be cautious. That's all we're saying. Right? So Richard, you had kind of divulged to me, uh, a few days ago on, uh, on a personal call we had with each other about some kind of issues and new, new challenges you've been having in a certain state named Georgia. We will not need the leave the state name out<laugh>, we'll go ahead and say it's the state of Georgia. And, um, I'll go ahead and let you kind of, uh, prep our listener here as to the, the problems that you're having with as it pertains to chains.

Richard Thornton:

Right. So, um, I I'm actually having two issues I'll call it. Okay. Um, one is, uh, the number of payoffs in my portfolio has increased dramatically, which after I've put all this work into a lot of these, you know, I'm, I'm not liking, uh, and the fact that a lot of'em are partials. Okay. Uh, I'm not liking because it's, you know, the only reason you do a partial is for the tail. Now why is that happening? Um, unlike when we went through the recession, uh, when rates were up and equity was down, coming out of the pandemic rates are still relatively low, but equity's way up. So a lot of people who couldn't qualify, um, for conventional loans for now can. So they're taking the opportunity while the market's still good to refinance. What that's doing is, is that's triggering reviews of chains of title. Okay? Now, I have a number of deals that are in Georgia and what I've found is that there is a nuance, um, and this is unfortunately hitting even some of the larger producers, uh, note holders. When I say note holders, I mean people are owning thousands of notes. Um, so it's not just little guys. There's a nuance, um, in the notary statements. Okay? So for instance, the notary statements that I get in California, uh, say that the document, uh, has been executed and this person has presented themselves to me, showing me my ID and you know, is giving me their signature and blah, blah blah. That won't cut it in the state of Georgia. Okay? If you have, you, you, maybe you filed that maybe it's wonderful. Um, because what I'm finding out is, uh, the note that I sold has been, has been, uh, owned by four different people. And state of Georgia has come back and said all of those notaries are invalid. The difference is, is that the notary statement has to say that it was the document that was being signed, either the assignment or the quick claim deed or, or whatever has to be signed in the presence of the notary and they have to show. So in the presence of is the, is the glitch and I'm now having to go back with all the previous, I'm, for some reason I, I keep getting stuck as being the coordinator for these type of activities.

Justin Bogard:

<laugh>, it's cuz you're such a nice guy,

Richard Thornton:

<laugh>. Yeah, I guess so. I don't know what it is called lame or whatever, but, um, I'm lucky. Yeah. I mean, one of the funds that that originated one of these doesn't exist anymore. Yeah. So I'm not quite sure yet how we're gonna resolve that. But if you have any deals in Georgia, go back and look at your notarized statements and see if they say, uh, what I just related. And if they don't, it's worth it to get'em changed, pain in the butt. But it's worth it to change because it'll save you a headache later on.

Justin Bogard:

So this is somebody, some, some lawyer or some attorney, I don't think this is the attorney general going after this per se, but somebody is just making this ridiculous and this, this is absolutely ridiculous. So when you, when you have a notary, they are supposed to be taking your ID and verifying who you are and validating that they are actually signing the document in front of that notary, that is the notary's job to do that. Right. So it's just kind of as eye how you have to go through this and put that verbiage on the statement that the person signed to notarize and having to go revisit who owned this debt before you and if they don't exist now, what do you do? Right. It's, it's just, it's a, it's a process that's just gonna be a, a nightmare for you, uh, for a little bit until you find a, a good rhythm for it. And then you may have to ask for forgiveness on some of that if you can't find the person that signed it before. Cuz you know, that wasn't your fault, you know, you weren't involved with it before then. So it's just, it's, it's just, to me, it just seem, it's very annoying. It's very frustrating for me even though I'm not in involved with it with you currently. But it's just frustrating to hear about that and how sad that it has to be that way.

Richard Thornton:

Yeah, I mean, and the, I mean, it can get expensive one, one of the clients and the, the problem is, is that when these guys refi guys, these borrowers refi, um, they're going into, uh, conventional loans that's great. But they're using different bank notaries and those bank notaries are real stick started, um, uh, title companies. Uh, and they're real sticklers for chain of title. Yeah. Which, and I'm not faulting for them. Yeah. But, but a lot of the other, if you've got a contract for deed or something like that, oh, let's face a lot of these title companies are a little bit fast and loose. Yep. And it won't cut it if they're, if they're conventionally refinancing.

Justin Bogard:

Yeah. It's just, and I don't have the whole entire story, I'm just hearing it from Richard's side of course. But, uh, you know, in defense of my buddy Richard here, it just, it on the surface it seems pretty ridiculous that this is happening. And then it's not just Richard, it's a lot of people that are, have been affected by this. So, like Richard said, just look at your stuff and see how the notary block was signed and, and you know, hopefully you won't be get called to have this action change, but maybe, maybe you will.

Richard Thornton:

Yeah. We're one reason it gets a little bit sticky is because a lot of the notaries at California say, look, uh, I've, I'm only gonna sign the, uh, recommended California form mm-hmm.<affirmative> and I'm not gonna notarize any, any other form. Then what do you do<laugh>?

Justin Bogard:

Yeah. I mean, most people want to do things the compliant way and the right way to avoid having future issues. Right. Just like this. And that's what you and I both are, are big believers in and that's what we try to do. Right. And it feels like sometimes you can't win. Right. You can't win with somebody and it's, you know, there, there's, there's a, there's a way to do things and there's no like bible that says this is the exact way to do it and there will be no fault back to you. Sometimes this, this is just an interpretation of what, what you need to do and, and, and how to do it. So it's just unfortunate that it's happening to you right now. And hopefully it's, it resolves itself quickly to where you don't have to spend a lot of time and money involved in it. But it is, it is very annoying.

Richard Thornton:

Right. And you know, the biggest thing is, I mean, we all have, regardless of how big our shops are, this is what I call a backroom issue. Yeah. And if we have to handle it, it's a huge time sink.

Justin Bogard:

Yes.

Richard Thornton:

Um, I mean we've got stuff that is can be much, much, uh, more productive. Um, but if your shop starts to get a little bit bigger, like we are, um, you've all actually gotta think about getting a good designated detailed person who knows how to handle this type of stuff Yeah. And pay them to do it because eventually it just gets too much and too costly.

Justin Bogard:

Yeah. They can chase down things that need to be done. They can, they can run, run with this. They can, you know, dovetail cast stopped here, I'll pick up here later in two or three days. It's just Yeah. It is as the, as the people that are the, you know, the executive level in the company, that's, it's more difficult for them to manage that than it is for somebody that's, you know, that's the primarily what they do is handle tasks like that every day, all

Richard Thornton:

Day. Right. And, and, um, for the most part, none of the servicers will do it. Yeah. And even if they do, it's on their time schedule. I, when I Correct was was young in this, I ask, uh, a, um, servicer that will remain unnamed<laugh>, uh, to, um, foreclose on a property and it was in the state of Alabama and it took over two years. I subsequently found out that you can close in Alabama in 60 to 90 days, but it was largely because the servicer, you know, went on vacation, didn't follow up, blah, blah, blah. It's just not, doesn't have the priority that it does for you.

Justin Bogard:

So when you have a couple of loans, it's really easy to manage all the steps in the processes because quite frankly it's not a lot of work to do. Cuz you only have a couple of loans to deal with. Right. And they may not be in sync at the same time going through the same process steps on the same day. They could be, you know, often frequency and, and, and where they're at in the timeline process. But Richard and I have, you know, many loans between us. I I would venture to say, you know, maybe, uh, a hundred loans between us, um, that we may end either together or outside of, uh, of what we do together. And it can be a very laborious process if you don't have help. Right. And we are, like we talked about before, we, we strive to do these things the right way in the beginning because we know the headaches in the end from our mentors that have warned us about that. You know, do this stuff the right way. Stay on top of it, make sure your documents are recorded, make sure you hold them in your possession, make sure they're originals, you know, all these things. Make sure the borrower's making their intern payments and you know, all that stuff. So now Richard and I have these processes in place today, but before today we didn't necessarily have, you know, three or four people helping us out and other vendors that can, that can work with us. Like we have been more streamlined in the past couple of years. So yeah, it's, it's once you probably Richard, I don't know, you put a number on it, but I'm gonna say about probably eight loans, six to eight loans, you probably need to start getting some help at that point.

Richard Thornton:

Yeah, I'd agree with that. A and the, the difficulty is, is that how do you get somebody who A, knows the field and b knows it well enough to continue to do it? Like I've gone to a couple of transaction coordinators for, for realtors, for those of you who don't know this, uh, a TC as they call'em when a realtor does it, uh, sales a property, they have a transaction coordinator, they usually pay'em four or$500 and they basically do all the disclosures and everything else. Um, and they're well worth

Justin Bogard:

It. I was just gonna say it. That is the best use of money you probably can spend on a deal is that money right there. Yeah.

Richard Thornton:

It's, it's huge. Cuz they cross all the t's, dot all the i's they've done it a gazillion times and they know what to do. So if you can get somebody like that who is willing to help you out and you say, look, this is what you need to do, you make a video for them. Yeah. Um, and, uh, you what you can do with Zoom or anything like that Yeah. And say, all right, um, bill or Sally, whatever their name is, this is how you do this so that they can pull that up every time and refer back to it. It's a godsend.

Justin Bogard:

It absolutely is. I'm, I'm just sitting here thinking in my mind how many times I've been involved in the transaction as the, the coordinating party or if you will, the project manager of the whole thing or quarterbacking this, this deal mm-hmm.<affirmative> and it's, it's a process, right. A title company you have, you have to deal with them in a certain way and follow their rules and their processes. And then the, the seller and the buyer that are involved with, with note sales that we're doing, we have to make sure that the, and the borrower's involved and making sure everyone's in line with their steps and then having a master list of everything that I gotta keep in control as a quarterback. Believe me, four or$500 spent for someone else to do it, a transaction coordinator is well worth it.

Richard Thornton:

Yeah. And you know, you're, you're very good at this Justin, in terms of making what I call single use videos. Yeah. Videos on how, how to fill out an assignment of<inaudible> or, or, or, or whatever it is because, um, you know, you, you may get somebody to help that doesn't know what they're doing at all. If they can sit there and go back and forth through it, through it, yeah. Then that's wonderful. It's a wonderful way to do that.

Justin Bogard:

Yeah. And then you find out if they do it 10, 12 times, they actually find even more efficiencies inside that process and refine it even more for the next person to do it. And so, right. It just becomes a better, cleaner way to do it. And then you as the executive, um, can free up more of your time to go after more, uh, you know, highly focused things that you need to take care of. You know, maybe tracking down deals or finding investors or liquidating assets and things like that.

Richard Thornton:

So, so tell me this, Justin, and this just popped into my mind. Would a, would a group like Casey Wilson, which by the way is very good if you I highly recommended them for holding your collateral files and mm-hmm.<affirmative> getting your, uh, things recorded. Would they do something like this? Like I'm describing or not?

Justin Bogard:

I think they could do something like this. It's probably not a part of their a la carte package. Mm-hmm.<affirmative> that they would do it because it involves, you know, working with a title company like on your behalf. Mm-hmm.<affirmative>. But what I believe they do, and we don't use these services per se, but they do have some due diligence services. They do have some post due diligence services that you can pay extra for them to, you know, review stuff before you buy it, make sure chains are good, uh, to give you the reassurance during due diligence if you don't have the confidence that this is set up. Right. Like, a lot of times, as you know, Richard and not performing loans, the chains can get kind of dirty pretty quickly. Right. And it can be kind of funky and you may have to fix some things. And those are ones that you really want to have an expert put their eyes on it and say, yeah, this is gonna be a problem. You need to take care of this today before you buy it and put the onus on the person you buy it from. And that way, you know, you can make it, make it, uh, your transaction a lot easier on performing loans. There's typically not too many challenges like that. The ones that Richard and I buy, there's no other assignments. We are the first assignment. So we typically don't have to worry about that. We just worry about other things that show up on title. And Richard and I have done, you know, thousands of these. So, uh, review thousands of these things. So we've, we've pretty familiar on what we are comfortable with releasing and versus what we need help with on having some things released on title.

Richard Thornton:

Right.

Justin Bogard:

Well, those, those are good questions, but yeah, we, we love, uh, KWA is our acronym form KC Wilson and Associates. They're out of, uh, Irvine, California.

Richard Thornton:

They are.

Justin Bogard:

And there are great custodian, there are many custodians out there. Uh, there's not a whole lot of'em that make themselves well known to our industry, but they are one of them as well. And connect with us and we'd be happy to share with a couple others with you as

Richard Thornton:

Well. Yeah. And they're, they are very efficient. Um, they, uh, unlike the servicer that I mentioned that had, you know, the, the, the slow processing of the foreclosure, they're much more efficient than that. Cuz they, that's all they do. They don't service, they don't do anything else is they file, they hold collateral and, um, they're much more focused on

Justin Bogard:

It. Okay. You, you're gonna get me going down a rabbit hole here, so I'm<laugh> I'm talk about a few more things now. You, y'all, you got my brain going here, Richard.

Richard Thornton:

Oh, okay.

Justin Bogard:

So this bears in mind, something to keep in mind that I'm a, I'm a believer of is that you want to have your vendors not be a one stop shop. You want to have your vendors do one specific thing they do really well. Uh, for example, um, most servicers, they will actually offer to hold your collateral for you. Um, and then you find out that's not their area of expertise. So we stopped having a servicer hold our collateral and manage the process of recording and things like that because that's not their area of expertise. So we use a specialized vendor to manage the collateral custodian process of what we do with, with document management. And so our servicer now just worries about the loan and does what they do best. So I, I am a big believer of making sure the vendor you're using is highest and best used for that specific part of the business.

Richard Thornton:

I agree. Uh, I mean, and that is born itself out in, in a number of cases that we don't have to go through here, but, uh, I agree with, with what you're saying.

Justin Bogard:

Right. All right, Richard, I think we have, uh, we have beaten this up well enough for episode number 26 and we're gonna, uh, transition really quickly and we're gonna go to a little fun side.

Richard Thornton:

All right.

Justin Bogard:

As we said, this is episode number 26. This is the last episode of season number four. And we will start season number five here in the new year when it will be released. And so this one will be released right before the end of the new year. Richard will probably already be in Vietnam and sipping on my ties or whatever he's doing out there, probably kicking back with his, with his lady, having a good old time. And, uh, wish you the, the safe travels my friend. And, and the best of luck over there. You're gonna spend 35 days in Vietnam, so hopefully we'll be able to record a podcast or two while you're out there and have a little bit of fun as well.

Richard Thornton:

We are, I'm gonna, I'm, I'm experimenting with making, uh, the latter part of it a workcation. So we've got a couple Airbnbs over there and, uh, we're going to see how it works out to, I mean, Eddie Speed and everybody else keeps saying that this note business is, uh, portable. Well, we're gonna put a test

Justin Bogard:

<laugh>, we're gonna put it in the full throttle. Mm-hmm.<affirmative>. Um, so as we've lightly touched on in previous episodes, we wanted to fully introduce and welcome, uh, Richard and I's New Venture together, which is called American Note Buyers. So you're gonna be seeing new branding coming our way, coming your way in 2023 with, uh, the podcast that we're doing with our monthly broadcast that we do. And then, uh, Richard and I also have, uh, managed the company and he's gonna manage a fund as well. And that's gonna be exciting news that we're gonna start introducing to the 2023 year as well. And so that's kind of the big news that we have to end with. Episode number 26, you're kind of Cliff Hangar into, uh, 2023. And so Richard, if you have anything to, to add to that.

Richard Thornton:

Well, I'm, I'm excited. Yeah. I, I got off the, uh, phone with the seller this morning before this broadcast, and he's got, uh, small portfolio, you know, five, five notes. Not huge, but he wants to sell'em all to us. And so I think, um, you, you and I both know that we've got plenty of product to put into this. Yeah. And, uh, I think it's, it's a wonderful way to be passive in the industry. One of the reasons the, uh, this fellow is, uh, seller is selling is he said, look, you know, I realize notes are are fine and they're, they're a good, but I just wanna be totally passive. I don't want to get this occasional, gee, somebody's got their car parked in the front yard and can you ask him to move it type of notice? And yeah. And this type of thing, he doesn't even want that degree of, uh, hassle. So I very politely said, well, you know what, I'll be glad to take that, uh, hassle off your hands. Yeah. You just sell us the notes,<laugh>.

Justin Bogard:

Yeah. So this, this new, um, uh, vehicle that we have this tool in our tool belt will be the fund, and it's gonna be our bank to go after, um, assets of just more than 1, 2, 3, 4, 5 at a time. We'll be able to buy, you know, much larger pools as well, which is what we'd like to get into, which makes our, you know, our acquisition costs come down a little bit, and then we can, uh, return that profit to our investors as well as at the debt service that we owe. And we can go into a bigger explanation, you know, with, uh, with kind of some one-to-one consultation on kind of how the nuts and bolts of this really works. Um, but yeah, if you guys have been listening to us for a while, you kind of know that we're in note investing and kind of how this being the bank works, and this is just another way to be the bank. And Richard and I are really good at managing the whole process and all the steps. And so we've had a lot of conversations with many people on how they, you know, would like to see this work. And so we've got the paperwork done, we've got everything inked, and we're just waiting for the 2023 season when you guys get this aired. It'll just be a few days after that when it goes live. And we'll be doing some introductions from emails. Uh, so be on the lookout for some new emails from American Note Buyers. And this is episode number 26, the last episode for season number four of the Be The Bank podcast. And I'm Justin Bogart, and a partner here is Richard Thornton. And we will see you guys in the new year.

Richard Thornton:

All right. Have a good jingle.

Justin Bogard:

Bye

Richard Thornton:

Bye.

Narrator:

Thanks for listening to Be The Bank. We hope you learned 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.