Epic Real Estate Investing - ROI without Tenants, Termites or Toilets: Nick Legamaro | 1151

Episode Date: June 3, 2021

In today’s episode, Matt is joined with Nick Legamaro, a CEO of USANotePro, an online portal designed for real estate and note investors looking to buy or sell loans secured by residential real estate. Apart from being The Note Guy, Nick has been investing in real estate since 2001 and has worked on over 1000 properties. Stay tuned and find out what inspired Nick to get into REI, how he creates ROI without owning real estate, and how YOU can do it, too! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Success in real estate has nothing to do with shiny objects. It has everything to do with mastering the basics. The three pillars of real estate investing. Attract, convert, exit. Matt Terrio has been helping real estate investors do just that for more than a decade now. If you want to make money in real estate, keep listening. If you want it faster, visit R-E-I-A's dot com.

Here's Matt. Hey there, Epic Investor. It's Matt Terrio from Epic Real Estate, where we show people how to invest in real estate using more of their mind than their money, using creative real estate investing strategies with an emphasis on retiring early. And if this is your first time here, really glad that you found us. If you like what you here, make sure you hit the subscribe button before you go. And if this is not your first time here, welcome back.

And thank you for continuing to share this with your friends and family. We just would not be going on 12 years if it weren't for you doing that. So thank you. I got a great guest for you today. I'm going to discuss notes. And then I've got the news, of course, and this week in crypto. Today's sponsor of the show, REI Blackbook. RIA Blackbook is everything you need to run your real estate investing business all in one place.

Convert more of your leads into deals and build a predictable sales system with the only all-in-one marketing and sales toolkit built for investors just like you. You can get 14 days of free access. Plus, their automated follow-up machine absolutely free at Epicblackbook.com. Epic blackbook.com. All righty, let's get right into it. Our guest today has been investing in real estate since 2001. He's done just about everything there is to do in real estate and even experienced the crash firsthand in 2008 and live to tell about it.

He's bought, fixed, rented, sold, flipped, or been a lender on a thousand plus properties, but has found his sweet spot in performing and non-performing real estate notes. As with them, he feels in control of his own destiny. He's going to share with you all about that today. So please help me welcome to the show, the note guy, Mr. Nick Legamaro. Nick, welcome to Epic Real Estate Investing. Hey, Matt. Thanks for having me.

You bet. Good to catch up. I know. It's nice that we're coming out of this COVID thing. Before we talk about that in your business and what you do and what you see for the future, Tell me, what were you doing just before you got into real estate investing and what had you make that transition? That's a great question.

It's been a long time since I've been doing this since the early 2000s. I mean, I was pre-crashed by about five years. So, you know, I, before that, I worked corporate. I went to college, got a degree. I came out of college. Went to work for PepsiCoA right out of college. And they taught me everything I wanted, what I wanted not to know about. making money for other people and I figured at some point in time if I'm going to work this hard,

maybe I should try to figure out how to make it for myself than for other people. It took me a little bit of while to get to that point, but not terribly long. I think it was pretty fortunate because here's the problem. And I'm going with this my own kids, right? My daughter's just literally graduating from the University of Texas like tomorrow. And congrats, by the way. Thank you.

Thank you. And congrats to hers. But the thing I try to communicate with them, I go, if you ever want to start a business or you ever think you want to do anything on your own, or you ever want to take that chance, now is the time to do it. Not wait because you don't have the responsibilities now. If you go get the corporate job, you're stuck, man. You've got the golden handcuffs on you.

That's how they lock you in. And it's really, really hard to rip away from that once you start getting the insurance and the paid vacation and that paycheck, whether you show up for work or not, it's really, really difficult to walk away. And that's why I tell people you really need to start now, not later. And you can't wait because the long you wait, the further you go down that road and then you eventually got to turn around and come back that other direction to go down the path that you ultimately want to take.

So how long did you wait then? I started a couple of companies in the late 90s. I was probably in the corporate world for about five or six years. And then I started doing some other stuff in telecommunication. And, you know, I had one of the, we had one of the very first VoIPO over anything companies. We did it back then when you had to pay for a long distance. And we had a bundle service to discuss how far things have come along now. And then I got in real estate in early 2000s and early 2000.

But back then, Matt, there wasn't a lot of stuff out there. There wasn't education. There wasn't REI groups. There wasn't meetup. There wasn't data readily available on the internet to consume. I mean, it was all extremely, extremely manually driven. And I was, and I, for the first four or five years, I did really low in fix and flips, sold them to other investors that had more experience to me and they turned them in the

rental properties and that's what they did. And then 08 comes along and we know what happened there. And I took about a year off and starting in 2010 is when I really got back into real estate again and really, really, really put a really conscious effort in the figure. figuring out what model I wanted to follow, why I wanted to follow it, and how I was going to accomplish that. Because I knew the whole time that the way that you build wealth and is through, is through real estate. There is really no other option in my opinion. Maybe crypto. I'm just kidding. I'm not a crypto guy, man. Oh, you're not? No. I mean, I'm thinking about it. But you know,

hey, borrow some of your money. I'll see what I can do with that. I was in. Yeah, yeah. I'm all in. I've been in since 2017, so I'm starting to mesh the two together. I know, man. Well, I wish I was in, you know, there again. Hey, I wish it was in then. Now everybody's like, oh, now it's too late. Sort of like the whole wholesaling game, man. If anybody had wholesales and has been doing it for a while, they go, I cannot pay in that money for that property. I could have bought that property five years ago for half the price. Yeah. And they're, they're failing to see the opportunity that what it's going to be going forward versus in they get stuck in their ways on what it was before.

And it, you know, paralysis by analysis, right? And you know, get nothing done. Right. The question is, what are you going to say 10 years from now? Absolutely. Totally. Absolutely. And that's exactly how you got to look at it.

And it's not going to change. I mean, it's not, I mean, it's going to, the environment is going to change as far as the real estate market. But building wealth in real estate probably will never change. Yeah. It's really kind of a final frontier that we have available to us. at least for the average person, right? Yeah, and that's the beauty of it.

There's 50 different ways you can make money, probably 100 different ways you can make money. And they're all very, very viable options. It's all about execution. At the end of the day, it's just about executing on whatever that path is that you want to take and making it happen and not, you know, waiting for excuses or coming up for reasons why you can't get it done.

Totally. So great transition. What's your one way? My one way is I'm all about being the bank, man. 100%. I'm all about being the bank. I'm all about controlling, not owning real estate. And what I mean by that is, you know, it's some way, shape, or form to be able to control

the property by having a mortgage note. Be the bank. You know, in every city that you go to, Matt, the biggest buildings in every city are bank buildings. They have Bank of America or Chase or Fargo on the top of them. And there's a reason that is that way. And they've learned a long time ago how to control and not own. and how to leverage and how to secure their investment by securitizing it through the property itself.

And I figured if it's good enough for those guys, it's probably good enough for me. That's really it. That's really it. And I'm pretty bullish on it, be quite honest with you. Got it. No, and that's good. I want someone to take a stand. I've got some questions. I can play devil's advocate here. Yeah, bring it on. You know, I got a friend, Joel Block. Do you know Joel? I don't think I know Joe. I know a lot of guys. I don't know Joe. He helped me set up my fund and he runs a little program if you want to go set up a fund and he'll walk. you through that. I am in the state of Texas. Okay. So the state of Texas is a little bit different

than a lot of the other places and things are a little bit easier to do certain ways than others. Lease options are a little bit more difficult. They can be done. Contract for deeds are not really the way to go. They can still be done, but a lot more moving parts than that. So anyway, enough for that. On with the questions. Texas is just slightly different than the rest the country. Yeah. Yes. That was a sarcasm there. Um, anyway, I take it, I take it. No, I mean, that I wear it with a badge. Based on our conversation before we started recording, I think it's good for all the right reason. I mean, it's different for all the right reasons. Yeah. But anyway, so being the bank, so with my friend Joel Block, he, uh,

tells me that Matt, the money is in the money. It's his quote, right? And I kind of know what that means, but I don't know if it's necessarily been my experience because I've tried both. I've done both. I hold about 50 notes. I hold about 50 properties. And I see a lot of pros and cons for both sides. And I almost see a need for a portfolio to have both. I agree. But to go straight down the bank, there's two things that I'm thinking about right now. I don't know. Before I go there, I probably went there too quickly. Why don't you tell me, be in the bank, like, are you buying notes from banks, are you creating your own notes? Are you buying notes from other investors? Tell me about your note business. So, yes, to all those. I've done all of them. I continue to do them. And if it's a deal,

it's a deal. I like buying notes just like people like buying fix and flip properties. And I can buy a note. I can fix the note and I can flip the note, just like you can't a piece of property. I can do the same thing with note. So a lot of times borrowers don't underwrite the, excuse me, sellers don't underwrite the borrower files correctly. We got to come in and do some cleanup and, you know, make sure we have a 1003 application on file and a credit report. But that's how we make the money on that. But I love creating the notes and I love creating a lot of, you know, out of basically thin air. And what I mean by that is going and acquiring the asset initially, either through some kind of,

some kind of acquisition, whether it be with cash, hard money, seller financing or buying it's subject to an existing lien. You're talking about the hard asset. The hard asset to sell. So I got to take possession of that for a certain period of time because I got to fix it, right? I got to fix it and make it consumable to sell it to an owner finance buyer because that's all I want to mess with. I don't want to mess with retail. I want to mess only with owner finance buyers.

And once I get to that point, then I can create the mortgage. And that'll be a rap mortgage for a short period of time depending on how I have the debt structured on the front side. Okay. regardless, I'm trying to get for me personally, and we can talk my hypothesis, I'm not a big fan of hypothesis where you write all the notes and then you pledge the notes, it's collateral and borrow it from the bank. I don't like doing that. What I personally do is I like to write a first and a second lien, and I write the

first lien at a dollar amount that allows me to sell that note immediately, get all my capital back out. So I'm in a cash neutral position. There's no cost basis. And then my profit on the deal is a free and clear second lien on the property that I already know everything about, plus whatever cash that comes in transactionally from the borrower when I sell it on the on the rap mortgage. That's what I like to do the most.

And I do it quite a bit. And so I end up with a bunch of $30,000 second liens. But man, if I do 30 of those a year, that's a million dollars almost in free and clear notes at a double-digit yield with no cost basis. I mean, what's the return on that? I mean, can't even calculate it. It's because there's no cost basis. It's probably more than 5 or 6%.

It's probably. Probably. Probably. You know, and it's a great deal for my note buyers when I go to sell that first lien because, well, first of all, banks always get paid, Matt. I don't give a crap about forbearance or any of that stuff because the banks will get paid. They always get paid because they might not get paid today.

they might not get paid tomorrow. They might get paid a year from now, but they have that property as security and collateral for the money that they lent to the borrower, right? And so they might have to come and do a loan modification. So what? Do loan modification yet what happens? All you do is move it to the back and in the note. Guess what that does? Let's pause for a second. Let's come back because there's all kinds of stuff where I can just sense that heads are swirling. So first and second. So you buy the asset. So let's say we bought it a little house, right? Yep.

You fixed it up. And now you're going to sell it and carry the note back. So you're going to sell it seller financing with you being the seller. You're going to finance for your buyer. Okay. So let's say it's a $100,000 house. Okay. What would be the typical situation of how you put a first and a second on there?

How would you sell that? What's that structure look like? So I would take, so I would probably my cost basis. So I usually write a approximately a 75% first lien. And then the second lien is the difference between the sale price and the cash that I receive from the down payment. So if I get a 10% down payment, for example, then the numbers would say I'd have a $15,000 or $15,000 second lien. Okay. Okay.

So then I got that. So that's easy to do. Yep. Easy to understand. Now you said you sell the first. That's correct. Okay. So this scenario, 75% is what 75,000?

you sell it for 75,000? Not quite that because the note has not been season. So I have to pay, I got to take a little bit of a haircut, pay a little bit of discount on, but I'm pretty close to that number because the ultimate, the LTV of that first note to that borrower is pretty, pretty low relative to the whole thing. The other reason why I can get close to that amount because I'm still in the deal in the second lean position. So that gives the note buyer also a little bit more security and protection because they know that if they don't get paid, I don't get paid basically. Right.

Okay. Do you have a typical interest rate or how you determine your interest rate? Yeah. So we underwrite all the borrowers just like Chase or Bank of America or anybody else would do. So we're going to follow Dodd-Frank, Dodd-Frank compliance. And in Dodd-Frank, it says I can write those notes at, APOR plus 6.5% and all APOR is an annual prime offer rate, which is a government index that says, if the rate is 3% today, then I can add 6.5 points to that, and that could be my,

my effective rate basically to the borrower, okay? So most of the stuff I'm writing right now is in that mid-nine, nine and a half, nine and three quarters range as we sit here today. Okay. Very good. And then what's the rate you put on in the second? So that's another thing. So what I personally do is my originate, I take the origination fees that I'm allowed to collect, and I put them on the second note because that's what I'm going to keep. And then I can actually add, since that's a junior lien or it's not the primary lien on the note, I can actually add an additional two points on that.

So I'm writing my second liens in the 10.5, 10 and 3 quarter range. I don't go full value, but I'm in, I am definitely in the 10 and a half, 10 and a half range right now. on the seconds. Okay. So these are like more than double what the market is, is a call. Yeah, it's actually more than, it's probably more than triple. Yeah, no, I was, I was being sarcastic again. Yeah, well, but you're right. Let's talk about that for a second if you don't, if you want to because. Yeah, yeah. So I'm like, who's your ideal customer for this? Well, it's anybody that can't go down the Bank of America and get a loan. And that's a big, big number right now, Matt, and especially in a post-COVID environment, because there's a lot of people that have had jobs,

they've had to change careers. They're no longer W-2. They're doing side hustles and they're making money some other way. If you're an entrepreneur, banks do not like entrepreneurs. Let's just be honest. They don't like the unknown. They want to see a pretty borrower that has a W-2 job that works for, you know, free to lay or wherever it might be. And they want to know that that's how you're going to get paid and it's going to be consistent. They want to see all that stuff. But that's just not the way America is these days. There's a lot of, there's a lot of foreign, foreigners that are, that are better, that are in the United States that have the right to work in the United States and pay taxes in the United States and are legally in the United States, but they can't go buy a house

because they don't have a social security number. That's one thing. Or you're an entrepreneur like myself and you as well, I have, I own multiple companies, Matt, and I don't get W-2s. I get just, just distributions. And they don't like when you own multiple companies. Even if I have all the cash in a bank that go buy that property, they still don't like me. It's just how they assess the risk. And I don't know the exact number is right now, but I think the numbers above 60% where you, that of the population can't even go down and get a traditional bank loan because of certain factors that prevent them to do it.

And that's really where we are. And there's a huge marketplace for people that want to have homeownership, but just have been told no for whatever reason. And that's our marketplace. You know, the irony there is, and just kind of occurring to me, that my assistant just bought a house and I can't because she gets the W-2 paycheck from me, but the person that provides a W-2 paycheck doesn't qualify. Isn't that funny?

Right. I mean, it's ironic. I don't know if it's funny. Yeah. Let me just, let me put a couple other pieces of data out there because I'm sort of an analytical guy. Sure. So we got 60% of the population can't qualify.

So that's a good number. Yeah, it's a great number. And so here's what I'll say. So I tell people to go do the Zillow test, okay? Because a lot of people don't, first of all, most people don't even know that they can write a note and be the bank. Let's be honest. They just don't.

Second of all, it's a $26 billion industry right now, Matt. $26 billion almost, billion with the B. So that means in the last four years, over $100 billion of notes have been written by people like you and me that aren't named Chase or Bank of America. That's a pretty substantial number. Right. Right. So, and why is that?

It's for the reasons that we just said. So here's a test. Here's a little exercise or homework assignment. I like to have people go in and do. To really understand visually what this means. go to Zillow and go do a search for properties for sale by a city, a zip code, county, whatever. I like to pick a county. And you put in and I'll just do like Dallas County and Dallas, Texas, okay? And I'll get, it'll say there's 3,000 properties available for sale. Okay.

Okay. Then I go into the refine the search criteria and I go in there and I leave everything the same and I go in it, I put the keywords in owner financing, seller financing. You know what that number comes down to? When it said 3,000 before I put those search criteria in. One or two. It's, you can count them on two hands probably. Yep. Because I search all the time to buy for myself.

Absolutely. So my point is if there's that, if we know that the population needs creative financing or owner financing and whatever term you want to use, because 60% doesn't qualify, but only half of 1% is available to buy in that, that seems like a pretty good business model and opportunity for me. It's economics 101. It's supply and demand. The demand is far greater than the supply for what we're talking about here.

And that is the opportunity, in my opinion. Yeah, no, I like it. No, that makes sense. I'm always looking at that from a buyer's perspective, but then I'm looking at it from a seller's perspective, that, yeah, you would have very minimal competition on doing that. little competition. So why do you like the notes better than say doing a rent-to-own lease option type structure? Well, I mean, if I was 30-year-old 30-year-old, 30-year-old man, I might have a different

outtake and look at it. But honestly, you know, have you ever had a mortgage on a house from a traditional lender? I got my, I just got my first one like last year. Okay. So I just sold my house that I had a Bank of America loan on, okay? I had a 30-year mortgage. like 99% of the population gets, and I literally took 21 years and I paid it off. Okay. I never called the bank one time. Never called Bank of America one time when I had that note. And most people that have a home mortgage with a bank, don't call the bank.

They don't call them when the toilet breaks or the roof leaks or they want and they need to fix the foundation or replace the water heater or whatever. They don't call. That's the beauty of being the bank. You don't, you can, you control it. it's quite understood that who the owner of the property is. And just the mentality is just a whole different thing. I just don't, can you make more money doing the other options?

Absolutely, absolutely you probably can. But a lot of things got to go in your favor. You got to have the property occupied. You got to get paid. Okay? I think we learned a lot in the last 15 months. What happens if you're a landlord and you don't get your rent payments, right? We talked about the bank will get paid.

I'm not sure you can say that about landlords. You may get money. You may get some, you could surely put a judgment on somebody, but that doesn't mean you're going to actually get the physical cash. And, you know, those are things. I don't get the depreciation, which is probably the biggest argument. But I do get amortized money, and I get it paid, and I get all my interest up front, and my risk gets mitigated every month that goes by because my exposure and what I have out,

it goes down. And it's just a personal preference. It's like ice cream, man. Some people like chocolate, some like vanilla. And it just really depends on what your preference is. I just prefer to be the bank. I figured this way if renting properties and being a landlord was such a great deal, I would think that the banks would probably figure out a way to do that.

And they probably figure a way to get depreciation also. And I think the tradeoff, at least in my eyes, is I like the tradeoff that I get from being a bank versus being a lean lord versus being a landlord. That's rough. But that's, hey, to each their own, man, there's a thousand ways you can make money. I'm going to start using that. I got, I got a trademarked and I've got it. You got a lean lord trademarks?

I got it, lean lord. I got the domains. Yeah, I thought it was sort of cool. I actually got some shirts made up. Maybe I'll send you one. Yeah, lean lord. TM. Yeah, exactly.

Perfect. I will give you. It's not international. So you could probably market it in Brazil and Costa Rica and those other countries. if you want. Well, I'll give you credit each time I say, okay? There you go. Perfect. All right. So let's go back to our structure. We got now, we know where the buyer comes from. That makes sense. 60% can't qualify for a loan. There's very minimal opportunities like this out there. So you got zero competition. So I have found the same thing. Like the buyer pool is is pretty deep if you know

how to market the property. So 75% or excuse me, like say there are, go back to our house. We got $75,000 first. And if that's got, you know, a nine and a half percent interest rate on there, that's a really good piece of paper, and that is a sellable piece of paper for sure. Where do you find that person? Well, I'm one of them, first of all. So, you know, what USANopPro.com, that's exactly what we do. We buy, sell, and create mortgage notes. But there's other, just like there's other vehicles that you can use for real estate,

there's note buyers and sellers out there just the same. I mean, you go on Google and start, uh, sell my note, sell my note fast for cash, just like you would put in, sell my house fast for cash. it's there. Now, I will tell you this, there's not nearly as many of them as there are the other, but doesn't matter. There's plenty of it. I don't know the exact number that's doing right now. 25 billion, if the average is 200, call it $200,000 average, and there's 25 billion a year, that's substantial. I mean, there's, there's, it's not that unique. Let's just leave it at that. Banks buy them all the time. Well, I built a whole company on this and we sold it to a,

to a federally chartered bank, and a lot of the notes that we sold prior to, that, we sold a financial institution because they couldn't create and write what we did, but they could buy them. That's the other beautiful thing of it. It is like, okay, that's even better, right? You can't do what I can do, but I can sell you what I have. Okay, so you sell the first and then you hold on to the second. Are you receiving payments on the second? Absolutely. Okay. And then the cash down, that just goes into your pocket. Yeah, the net cash, because I got to pay marketing fee and overhead and stuff like that. But yeah, so a typical transaction for me right now that I'm doing. My net cash on a transaction is about $15,000 to $18,000, the net cash,

and the second lien is about $30 to $33,000 at about 10.5% and there's no cost basis on it. That's my, so I get some cash now in the transactional portion of it, and I get some cash flow over as far as long as that notes in play. And I guess what I also get. I get the lump sum payoff at the end when that note either. gets paid. I'm going to write a 30-year note, but let's be honest, most notes don't go 30 years. Right. Right. The average lifespan of a note somewhere nine, nine and a half, 10 years now. It's gone up a little bit. So 10 years from now, I run the amortization schedule. The title company calls the bank for the payoff. Who's the bank? I'm the bank, right? And I run my amortization

table based on the terms and the rate of the note that I wrote. And I say the payoff on my original $33,000 note 10 years from now. I don't have my financial calculator in front of me, but it's probably somewhere around $26,000 or $27,000, right? So guess what I get when that buyer either sells that property that I sold to them or they refinance? I get a big fat check. Now I just got another $26 or $7,000. That's the beauty of the game, in my opinion. Instead of taking it's flipping out of and taking all transactional cash. And this is something a lot of wholesalers should, can do and they don't even realize that they can do it. And we work with them all the time and I know you do as well.

Yeah. Yeah. Wholesalers are really, they're missing so much to the pie when they do it the way that they do it. So you're in second position. So if the buyer defaults, you just go ahead and foreclose and take it back and do it all over again. Surely can because when I write my notes, I always have write a first refusal on the first. Right. I write that in there before I sell it.

I do some other little creative things. But at the end of the day, most of the stuff, that's how we write it. And then it doesn't matter how I take it down, right? I can take it down with hard money. I can take it down with cash. I can take it down on Subject 2. I could take it down with seller financing. Now, obviously, seller financing and subject 2 are better because I can let that debt right

as long as I need to. I don't even have to sell off the first right away, right? Right. Because I'm just arbitraising at that point. I'm just taking the spread the difference. But guess what? The note gets called. sell the first note, pay off the underlying debt.

I don't have to do that because that's when we structure correctly. That never happens, but I can do that. And I've had sellers come back to me two years later, three years later on a sub two transaction goes, hey man, I really need to get this out. I got a government job. They're calling my stuff. No problem.

I'll just sell the note, pay off the debt and beyond. I'm not trying to hold anybody hostage on all this stuff. I can make just as much money on the front side or if I wait five years to get it. I'm just trying to. I want to help people. right? That's what this is really about, is help solving problems and being problem solvers and not problems. And when I can help a seller short term out of a situation they're in, then that's a good thing for me. And when I can help a buyer obtain home ownership when they've been told no,

that's a good thing for me too. And I get to just, you know, materially participate on both sides of the transaction. Nice. So when you acquire the asset, you're kind of looking to be all in with the purchase and the rehab at 75%. You know, it's a little tougher right now, Matt, to be quite honest with you. It's probably closer to 78, maybe 80%, but here's the deal. I don't have to be that inch

because I still can take that cash that I have that I got from the down payment. And even if I sell, let's just say my cost basis in this example is $80,000, okay? And I write the first note for $75,000, right? And I sell that first note for, let's say, $73,000. Well, I'm,

I'm $7,000 in the hole after I sell that first note, right? Well, but I just netted, what is that, $10,000 in cash. So I could just take that $10,000 cash and pay down. And so now I don't get as much cash on the deal, but I still get the whole second note. And that's my profit on the deal. So there might be a little less cash. It just really depends on the deal. Okay.

All right. So now we can switch to a devil's advocate. Yeah, bring on the devil. All right. First thing is, I'm looking at, I know as a bank, holding a mortgage is actually a liability on their books because it continues to get smaller and smaller and smaller. Are you concerned with that at all? Because your note gets smaller. As me being, when I'm being the bank. Yeah, because your note's getting smaller and smaller. That's true, but I also know that I also know that the likelihood that's going to go 30 years is highly, highly unlikely. And if I see it going that way, I can always cash out on my note. Somebody who's always willing to buy it. Because you've got to think of it this way, Matt.

There's a lot of people that are looking for alternative investment strategies where a three or four percent return on a securitized investment is a great deal. Not necessarily for you and me because I can get more. But you know how much money is sitting in IRA accounts, for example, that are self-directed where it's just sitting there, Idle, not getting a nickel of interest. I mean, there's probably three trillion dollars out there right now of idle IRA money that people can invest into whatever they want because they control it and they don't even know that they can do it. So it's more of an education thing. There's a lot of people, you know, you can go buy Amazon stock and Tesla stock and whatever you want all day long. But, you know, if any of those go down in value, good luck getting one of those two CEOs to pay you to your loss, right? Yeah.

I don't care about the stock market. I was, I don't either. Lord to landlord right now. Let's do it. Yeah. So that's the first thing. So you're okay. You would rather rather just sell it and get the cash and lose the cash flow then.

If I had to and I just go buy or create something else different. But I'm going to get, but that that rate of return, that interest, that coupon rate, it's there for the life of the note. It just, you're just getting front loaded interest first and a little bit of principle and then it flips. But the payment doesn't change over time. So the effectiveness of that yield, it doesn't. it doesn't change as it goes over in time. Right. Okay. So then that takes me in my next thing. Because it doesn't change, which is becoming more and more of a topic these days, your vulnerability to inflation. How are you feeling about that?

Well, it's a little bit different for me because when I have a zero cost basis on it, I'm not nearly as concerned. And so the pros and cons of this are whether the market goes up or down, it's immaterial to me. It's a non-factor because if the more, if the, if the property values drop, I'm still getting my $1,000 a month payment. If the property values go up, I'm still getting my $1,000 in payment. If the properties go up in value and I'm getting my $1,000, my position's even more secure. So the real risk that comes in is if the property values drop tremendously, and I stop getting my $1,000 a month payment. But there again, that could very, easily be the same thing and having a vacant property or not getting paid from a tenant or doing

all those other things that go into just, you know, the risk that they're right. So that's comparing the cash flow to the cash flow. Yeah. But then there's other profit centers on the physical asset of the real estate as well. True. Right. Yeah. Okay. I'm asking you questions and I already know the answer. Oh, I'm glad. I like to say it out loud because, you know, things changed six months ago is not the same as Right. Well, here's another point to my inflation question is, you get the $1,000 regardless of what the market does, but I'm talking about what the dollar does. For example, you know, a thousand dollars is a round of four for golf at a really nice country club. Yep. And two years, three years, that same round of golf might be $1,300, but you still only have the same $1,000. Yes.

Right? So that's where I'm going with that. Yeah. Well, there, you know, there again, if you get, you can surely, but the nice. thing about these. They're very liquid assets. So you can surely, you know, dispose of them or sell them or whatever you want and do it and choose to do it. But there again, if things get, if things get, you know, that's a good point. If things start becoming, inflation becomes super high. But here's the other thing you got to remember, Matt, is if rates start going up and inflation gets higher, guess what I get to do? I get to do the same thing, right? I get the right higher interest rates.

Maybe I'm writing 12 or 13 percent in. On your new deals. Yes. Yes. Yes. Right? So, I mean, that makes a case for you that you'll always be working. Well, it means a case that I mean, I can just write at a higher rate.

So. Right, but you got to go write a new deal. Yeah. Right. Okay. All right. And then the next thing is because that inflation thing, that's really high on my radar right now because we witnessed a lot this year.

And I'm seeing it everywhere. And just a really simple example is my wife's latte was $4 this time. last year and now it's $5. So we see inflation at 2%. We see the cost, the consumer price index at 4%. But no, no, no. We really felt it in our pocketbook at 20%. Yeah.

Look at what's going on. Look at how many people are in forbearance right now and are in default, but look how low unemployment is. How to hell does that maybe make sense? I don't get it. I don't, we're not getting all the information to make the best decisions that we can make. I can talk about that one forever also. Yeah.

I can stay focused. Yeah. I'm fine. Keep me in my lane. Right. No, no, that's good. And then the third thing would be, gosh, and just the news as of today of what Biden is doing to build up the IRS and their agents and their staff and their force. Like they are getting direct bank access, implementing AI technology and increasing their agent force by, I don't know, it was like four or five times. And they're going after your dollar. and they're going to make sure that you pay your fair share, Nick.

And so the different way that that note is taxed versus the passive income from the real estate is taxed. Yeah. It's going to be interesting. Yeah. I'm not an attorney. I'm not a CPA. I'm not a financial advisor.

So I'm not sure going to give any advice or recommendation. No, we just play two of those on a podcast. That's all. Yeah. Thank goodness I got Bob Bloom in my corner. You know what I'm saying? Oh, Bob's my guy too. Okay, so we got it.

Hey, anybody, go get some asset protection. If he can't help me, nobody can. That's what I keep telling him, man. I'm going to throw that at him. Anyway, all that to be said, I just want to have a little bit of fun with you because I got a bunch of notes too. So I see the pros of the notes. I like the passive income and no phone calls from anybody, right? So I like that.

And then with so much real estate that I own, I've got so many carry, what they call, lost carry forwards. Yeah. available to me. I just offset it by doing more notes. And so I can take that. I would be much more concerned if I like, we talked about it just briefly on hypothesating the notes. I think that could be a dangerous proposition, you know, where you basically take that $100,000 note and you go to the bank and you assign the note as collateral and you borrow, you know, 5% money, right, on 70% of it. And then you take that money and you reinvest it there. Well, I just not, I'm not a personal fan of it.

A lot of people do it, though. And when times are good, everything's good, man. Right. Well, here's the other side of that. You know, if you're going to be aware and conscious of what inflation is doing, because we have inflation that's working out as from both directions, from the printing of money, which is one way inflation is created. The second way is supply shock.

And we're short on everything right now, right? I mean, we're short on ketchup packets in our. Chick-fil-A sauce. Yeah, the Chick-fil-A sauce. What's that all about? We're short on the lumber and the steel and the sand to mix the concrete. And it's like, so we have kind of both forces that would typically cause inflation, one or the other.

But we have both of them working really strong right now. And I see carrying a lot of debt is actually a really good position to be in, being the, being the debtor or the debtee. No, I want to be the debtor. Yeah. I want to be borrowing money because that inflation is going to crush my debt just as much it'll crush my dollar. Well, that's why I love subject to deals, right? I mean, because it's cheap bank debt and it's never going to change. Think about that for a second. Think about what's

been written over the last 10 years, Matt. Every gosh darn loan on the planet has been written somewhere between two and a half and five percent. Oh, I know. I mean, that's, then Nick, we go down the other way. I'm not going down. I'm not going down. I'm just saying you brought up debt. There's your cheap bank debt that it's never going to do. And I love it. But then all of a sudden, And if that starts to increase, that's going to be a real asset that you got this two or three percent debt. And now everyone else is getting new loans at five and six percent. But then there makes the case for now that the banks might not let the subject to slide so much because they could have wrote that new paper at a higher debt. Maybe. I don't know. We'll see. I can't believe I'm even

talking like this. Like, you know, five years ago, I wasn't thinking about this. I was just getting me cash flow. It's absolutely crazy. There's so many other things to think about now. We keep talking about it long enough, it'll change again before we finish this call. Exactly. And then with the whole crypto thing and the decentralized finance, what is that going to do, the central banks? Their days are numbered, like the printing press. Oh, my goodness.

Anyway, the world is changing. We've got to change fast with it or else we're going to get that. Exactly. Exactly. You've got to change fast. Exactly. You've got to be nimble and you've got to be quick. Totally.

Well, Nick, it's been a pleasure. If someone wanted to get in touch with you, what would be the best way for them to do that? They just reach out to us on our website, USANotePro.com. WWW. USA Notepro.com. They can reach me out there. They want to talk about notes, buy and sell and creating lending. There's educational stuff out there.

What's the list of the services that you do there? Well, we basically buy, buy, sell and create mortgage notes. By selling. People how to be the bank. That's really what this is ultimately about. Either buying it and being in the bank or creating it from your own. your own efforts. You know, we did, we work with a lot with, you know, landlords that are tired to be in landlords and want to get out of the landlord game because they're tired of not getting

paid and converting them. They like love the cash flow, but they don't like the landlord aspect of it. So we teach them how to become a big bank instead of a landlord, we already talked about. And there's, then there's wholesalers that we do a lot of work with, which we show them how to monetize their dead leaves and go get the creative, put the creative financing element in it to do exactly what we talked about. And then we have people like my mom and my dad and people that have a ton of money sitting in self-directed IRAs and say they don't want to do anything but get a return and protect their their equity and their wealth. And I think one of the best ways to do it is investing in the notes because it's still securitized by that by that physical

property, which I personally like. For now, that could change in six weeks, man. Yeah, you never know. It's only 3 p.m. here. And who knows what's going to happen in the next hour? It's early, man. Because stuff is changing quickly in this place. Well, super. So you can go to USANotepro.com where Nick and his team will buy, sell, create notes, and

or, and they'll also teach you how to do it too. Fair enough. We had some stuff that we're working on right now. It'll eventually be posted out there. I have some videos out there and sort of walk through some of the modeling. And it's just, we just, I just, I'm all about collaborating and helping people, get deals done and as a result of it, I get more deals anyway. So it's a win-win for everybody involved. Sweet. No, I think it's a good business. It's a really good skill and base of knowledge to have.

For example, the wholesaler who knows how to do just one thing, you start arming yourself with a few different layers of education. All of a sudden, you can take these small deals and turn them into big deals or take these no deals and turn them into deals, right? So that's, that's it. And that's where we're going to when this forbearance lifts, man, that's where there's going to be a lot of people that have, this is different than 2007 and eight, man. There's no, we're not going to see short sales. Short sales. Why would a short sale really exist?

These properties have so much equity in them right now. Yep. And it's debt equity to the homeowner. And they're in a, they're in a distress situation. The only way they can get any of that equity out is to sell. They can't loan money. They can't refinance.

They have to sell and go do something else. And that's it. And that's the only, so there's going to be a huge opportunity for folks to come in and help those people lot of those situations and maybe you buy it subject to the existing debt and give them a little bit more for their equity or it's a huge wholesale model too and then you do whatever you want to do it with it from there. Yep, a lot of like with every crisis is followed by opportunity. That's where we're at right now. Money of opportunity. Perfect. So Nick the lean holder, oh, excuse me, Nick, the lean lord

legamaro. It's actually Nick the note guy, man. It's like, that's like, that's okay, we can do that. I love the lean lord. I think this is great. I like play on words like that. And this is I know. I know. It's all good, man. It's been a pleasure. If you want to catch up with it, go to usa note pro.com. And Nick, let's stay in touch. We'll do this again. All right, buddy. Thanks for time. You bet. Take care. And I'll be back with the news right after this. When you go to work for your money, does it return the favor? If not, no worries. You do not have a money problem. You merely have an idea problem. We're cash flow savvy.com. And we'd like to share a new idea with you around income real estate that can transform your financial future and accelerate its

arrival. Go to cashflow savvy.com and download a free investors package. Cashflow savvy.com. You do not have a money problem. Merely an idea problem. Cashflow savvy.com. More ideas, less worries. Cashflow savvy. com. All right, in the news, Senator Rand Paul out of Kentucky had just two words in response to news of unearthed emails from Dr. Anthony Fauci this week. If you didn't know, thousands of emails obtained by BuzzFeed News and hundreds more reviewed by the Washington Post through Freedom of Information Act requests show Fauci's responses to both critics and high praise as he worked to communicate the dangers of COVID-19 to the U.S. as director of the National Institute of Allergy and Infectious Diseases. In one particular email, he was thanked for playing down the possibility of the virus being born in a lab. and Senator Rand Paul had just two words told you. Paul wrote that in a Tuesday tweet.

And you know, you never want to be that guy that says, I told you so. That's never like a cool thing to do. But sometimes you just can't resist. And I can imagine Senator Rand Paul is feeling rather vindicated this week, just like Senator Tom Cotton last week and Dr. Atlas the week before. Longtime Duke men's basketball coach, Mike Shishowski, is calling it quits after 46 years. Shoshowski will retire after the 2021-22 college basketball season after putting together a coaching career for the ages.

He led the Blue Devils to five NCAA tournament championships, 12 final four appearances, and he won 1,170 games, which is the most in men's college basketball history. So congrats to him. The hits keep coming. Shares of AMC, the largest movie theater chain in the world, surged more than 120% Wednesday to a new peak above $70 before falling back slightly. Trading of the shares was halted twice due to volatility. The stock closed Wednesday at $62.55, up 95% for the day. I actually own a few of those, and I didn't even know this until I read this in the news.

I should probably check on them. I think I bought them at $11, and now they're just, now they're $62. That's a pretty good return. I think I'll have three or four shares, though. But hey, it's better than a hole in the head, right? The Olympics are still on despite a ton of backlash. The spotlights on Tokyo and Simone Biles, of course, beginning July 23rd. Sick of being indoors, all U.S. national parks are free to enter on August 4th and August 25th.

The first NFL preseason game is August 5th with the Steelers v. the Cowboys. Broadway returns to New York, September 14th. And no spectators were allowed at the 2020 U.S. Open, but tennis fans can fill the stands this year from August 30th to September 12th. And speaking of tennis this weekend, there's been more back and forth than tennis fans are used to. Naomi Osaka, star tennis player and the highest earning female athlete in the world drop out of the French Open this week. The backstory here is Osaka announced last week that she wouldn't be doing any press during the tournament, saying that press conferences were bad for her and other players' mental health. And quite honestly, I don't blame her a bit.

It just takes one bad reporter these days to publish a bad story or with a little bit of misinformation or to make a mistake, whether that's honestly or accidentally. And then all you got to do is just watch social media take off with it. And that's no fun. I wouldn't want to deal with the press either if I were her. So kudos to her for standing her ground. It was kind of expensive. She was fined and everything.

And she said, nope, ain't going to do. it. Hopefully, she will be participating in the future and hopefully she'll get some more understanding from the powers that be of the National Tennis Association. I think it's called the NTA, National Tennis Association. All right. Democrats, in the Texas House, a representative staged a walkout to block the passage of a restrictive voting bill opposed by many corporations, including American Airlines and Dell. And President Joe Biden is comparing that bill to Georgia's voting bill and putting them both in the lump sum of Jim Crow in the 21st century and an attack on the right for black and brown people to vote.

You know, if this is true, these are two very bad bills and we should oppose these. But you know what? I've read the bills, both of them. And I've read the Jim Crow laws as well. And I'm totally missing it. I don't see the comparison at all. I read the whole thing on everything. And I realize this is a very sensitive subject, so I'm not making light of it.

I mean, I really do want to know. So if there are similarities that I'm missing, please send me an email pointing out as such. I must not be reading in between the lines in the right place. Legal cannabis sales in the U.S. past $17.5 billion in 2020, a 46% increase over 2019. American Airlines in Southwest are delaying offering alcoholic beverages on flights due to an increase and unruly passengers. And speaking of unruly people, a Boston Celtics fan was arrested

after he threw a water bottle at Kyrie Irving's head, the latest in a string of incidents where fans have targeted NBA players. Come on, peeps, grow up. You can handle it. And then porta-potty companies are struggling to meet demand.

And that's all I got there. I thought that was an interesting headline. And it made for a good, what do you call that? Pattern interrupt. I don't know what's causing the excessive demand of porta parties. I guess on all the construction sites, right?

That would make sense. So the UK recorded zero new daily coronavirus deaths yesterday for the first time since the pandemic began. Prime Minister Boris Johnson has pegged June 21st for a full reopening, and industry groups are pressuring him to follow through. Krispy Cream filed to go public this week under the ticker symbol, DNU-T-D-N-U-T-D-N-U-N-U-N-T. A much better choice than K-R-P-Y, crappy. but less creative than GLZD glazed.

There are three stats that illustrate the travel industry's rebound. Number one, American Airlines expect 47 of its top 50 corporate accounts to start traveling again this year in a promising sign for business travel, per the Wall Street Journal. Number two, TSA screened nearly two million passengers at U.S. airports this week on Friday specifically, the most since the pandemic began. And number three, Hilton CEO said that Saturday night of Memorial Day weekend was the busiest its hotels have been in the COVID era. 93% of rooms were occupied.

And President Biden is suspending all oil and gas leases in Alaska's Arctic National Wildlife Refuge, reversing a signature policy of former President Trump. Can you say $5 a gallon? Now, for this week in crypto. This week in crypto is sponsored by My First CryptoCourse.com. It's the beginner's guide to investing in crypto assets that will show you how you could safely 10 to 20x your money this year with Bitcoin, even if you're brand new to crypto. For a limited time, Mike Dillard will give you three of the top crypto assets he's invested in

in this year. So go to my first crypto course.com, my first crypto course.com. All righty, Guggenheim, active allocation fund controlled by global investment and advisory firm Guggenheim Partners, has announced plans to launch a new fund that may seek investment exposure to cryptocurrencies with an emphasis on. Bitcoin. Canadian light electric vehicle, L-EV manufacturer, D-MAC, announced Spiritus. Its upcoming electric car that will come with its own comprehensive crypto infrastructure. The model should support some crypto operations, including mining for Bitcoin, Ethereum,

Cardano, and Dogecoin during charging. And is set to debut in 2023, the company stated, I might be in line for that car. I got to see what it looks like first, but that might be worth that card just might pay for itself. Beginning August 3rd, Google advertisers offering crypto exchanges and wallets targeting the United States may advertise those products and services when they meet several requirements and are certified by Google. The company said this weekend, it's updated policy. You know what that means?

Translation to more mass adoption. Once those wallets and exchanges can start advertising their services and their products, that's only going to bring more people into creativity. crypto and it's only going to drive the price up. This is the part that gets me so excited is when these household names get involved and they just keep getting or they keep participating and making it more popular. And, you know, it's not too late. In fact, it's still very, very early.

But you can only listen to so many of these headlines before you realize, wow, it seems like everybody's in this but me. It's going to get there. And speaking of household names, Coinbase is partnering with Apple and Google Wallets for crypto purchases as mobile payment usage is on track to surpass half of smartphone users by 2025. And that's this week in crypto. And that is the show. If you found this episode valuable, who else do you know that might too?

There's a good chance you do know someone else who would. And when their name comes to mind, please share with them and ask them to click the subscribe button when they get here. And I'll take great care of them. All righty. That's it for today. God loves you. And so do I.

Health, peace, blessings, and success to you. I'm Matt Terrio. y'all yeah yeah we got the cash flow huh yeah yeah we got the cash flow yeah yeah we got the cash flow you didn't know home for we got the cash flow this podcast is a part of the C suite radio network for more top business podcasts visit c-sweetradio.com