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Brian Lauchner (00:02):
How can a guy do almost 50 deals all over the country and never receive a single phone call from a tenant about toilets, stay tuned.
Brian Lauchner (00:24):
Well, welcome back to NoteSchoolTV. We are live once again, just like we are every single Wednesday at 11:00 AM central time. Make sure if you're wanting to engage with us, you're not just liking this video and subscribing to the channel to stay up to date, but actually clicking that bell notification to subscribe to the channel and really get those notifications coming in so that when we go live, you know about it and that allows you a chance to jump on, ask some questions, engage with us a little bit, and really be in front of your competition, getting the latest and greatest information coming up. If you're new to NoteSchool or new to NoteSchoolTV, I'd love to invite you to learn a little bit more about NoteSchool, by going to www.NoteSchool.com/TV, to just learn a little bit more about what a note is and what NoteSchool does and how can I learn more about this stuff? Right.
Brian Lauchner (01:12):
Today we've got a very interesting topic that I think that a lot of, you know, wholesalers, rehabbers, even landlords are going to find this to be quite fascinating, because this is a topic that really hits home from a standpoint of, you know, we talk about in the note business making money today and how can I make some money today? Using some of these notes strategies. And I think that one of the guests that we have a student of NoteSchool is going to be able to reveal some of that to really open your mind to maybe some other opportunities. And so I've got Mr. Joe Varnadore here with me on the on the call today and he's going to come on and how you doing Joe?
Joe Varnadore (01:49):
You know what? I am doing amazing Brian, how are you?
Brian Lauchner (01:53):
Yeah, living the dream, right?
Joe Varnadore (01:53):
Living the dream. It is a great day here in South Florida, man. It was 40 degrees last night. So it's, you know.
Brian Lauchner (02:01):
Man. So Joe, tell me a little bit about what do you got for us set up today and who's your special friend?
Joe Varnadore (02:09):
So we have Justin Bogard, Justin is from Indianapolis, Indiana, and Brian. He is, I'm going to call big fan, I'm a of Justin, right? And I'm going to call him the he's the package, right? Because he is become an amazing note investor flipping notes, right? He's become an expert on raising private capital. He has his own successful meetup, right? He is the father now to four kids, right? Three girls and a boy, and young boy. Takes them all to karate every week. We call him the karate man, right?
Brian Lauchner (02:52):
The karate Dad.
Joe Varnadore (02:54):
Yeah. Karate dad. And he is just an all around good guy. And this was a guy who was, you know, trying to do some landlording, and some fixing flipping. And just, you know, when I met him in Indianapolis at a REIA there. It just clicked for him and he just took it and ran.
Brian Lauchner (03:12):
I love it.
Joe Varnadore (03:12):
And as a matter of fact, he was a, he's been a multi award winner every year at our NoteExpo event. He has been the investor of the year for NoteSchool for 2020. So
Brian Lauchner (03:28):
Why I'm excited to learn a little bit more, he's the real deal. And I think this is going to be encouraging to a lot of viewers who maybe right now in your business, you're trying to figure out how do I transition, right. And I think that you're going to have a light bulb click just like Justin did to say, Hey, maybe this note business as Eddie says, it's a thing. Maybe this no business is a thing. So Joe, I'll hand it over to you. And and you kind of share a little bit with Justin, Let's get into it.
Joe Varnadore (03:56):
All right. Let's bring Justin on. Hey, my friend, how are you?
Justin Bogard (04:01):
Doing fantastic. How are you doing?
Joe Varnadore (04:03):
Very good live and direct from Indianapolis, Indiana man.
Justin Bogard (04:07):
Yes, sir. It's freezing here.
Joe Varnadore (04:11):
Did we have a big Thanksgiving?
Justin Bogard (04:11):
Yes Sir. We did. It was a private, it was just in our house.
Joe Varnadore (04:15):
I got you. We did the same thing. So Justin, tell us just a little bit about your beginning story of what you were doing before you came and saw a NoteSchool at Indiana REIA.
Justin Bogard (04:32):
Yeah. So I was like, anyone else that watched HGTV, I wanted to be a house flipper. And so I watched it, I learned that, Hey, there's someone local coming to town. And so I learned a little bit about it spent some money on some training and ended up doing some of my own deals, wholesale deals fix and flips. And I found out quickly, I didn't like that. Joe didn't like it very much so.
Joe Varnadore (04:57):
Yeah.
Justin Bogard (04:58):
So what I did was I made some money doing that, whatever I put into it, I kind of got back out of it and it wasn't really going anywhere. It wasn't built for it. And then lo and behold you came to town and was teaching about mortgage notes. And I was curious as to how you make money on mortgage notes. And by God, there was a couple of slides up there. I can still remember today that you had, that just resonated with me. And I just switched my whole game plan and my mindset over to being the bank and trying to figure out how to do that and alleviate all the competition elsewhere with standard real estate investing and came over here to the note side. And haven't looked back since, so that's kind of the beginning.
Joe Varnadore (05:36):
You have not looked back. I mean, it has been nothing but a straight up trajectory for you guys in the business. So I think the slide you were referring to was the one that had the the bird dog, the wholesaler, the fix and flipper, and then the ultimate was the landlord, right?
Justin Bogard (05:57):
Yeah. It was the guy In the business suit, holding the wheelbarrows full of cash. That's my favorite part.
Joe Varnadore (06:01):
That's right. Yep. That's a great, great slides. So Justin tell us so you were, you know, you were like a lot of folks that are out there today. You didn't have just a bank account bulging with capital right? So you went out and you you started talking to people you started your own little note meetup. As a matter of fact, I talked at your note, meet up a couple of times and came in there and we talked about that. So you just, you cultivated folks through that meetup, didn't you?
Justin Bogard (06:35):
Absolutely. It's just getting the word out in your local area and just kind of branding yourself as the note guy and then stuff starts funneling to you. I'm still getting good traction from stuff I've been marketing, you know, two or three years ago, someone reached out to me recently at an event that I spoke at two years ago, that's trying to do a deal with me right now. So, which is great.
Joe Varnadore (06:56):
Yeah. So you had a fellow that was attending your meet up there. And I think he attended several times and over much. Right.
Justin Bogard (07:06):
Yeah.
Joe Varnadore (07:06):
And came up to you one day and said, Justin, I love what you're saying. I want to invest with you. Right.
Justin Bogard (07:13):
Yup.
Joe Varnadore (07:13):
So yeah. Tell us a little bit about that fellow. He was just, he was at your meetup, right?
Justin Bogard (07:19):
Yeah. So we have a couple like that, that just kind of hang out and just want to learn and absorb exactly what I'm doing and how I'm making money. And they get curious and they get more curious and you're just kind of feeding them information a little bit at a time for them to chew on, and lo and behold, they typically have a couple of hundred thousand dollars of money to spend on some loans or kind of partner with you, or be able to sell partials or, you know, actually borrow their money to go out and buy your own notes with as well. And so I've kind of done a combination of several different things with a couple of different people, which has been pretty nice, but it's all getting out there.
Joe Varnadore (07:54):
One quick question about that.
Justin Bogard (07:56):
Yeah.
Joe Varnadore (07:56):
So you're not spending like 30 hours a week or a month on this meetup. Right? You spend a couple of hours a month putting the meet up together and you meet virtually now obviously on Facebook live.
Justin Bogard (08:08):
Yeah. We do meet virtually. Now we do have the live version that we want to go back to once we're able to, but for now it's virtual. We do stream it when we do it live as well. But yeah, exactly. I spend a couple hours a month just preparing, you know, I try to go over what's going on in the mortgage industry right now and just keep people's eyes open as to, you know, why this is a good alternative to what they're currently doing.
Joe Varnadore (08:31):
Right. So in 2019 you ended up doing 50 plus deals, right.
Justin Bogard (08:39):
Yeah.
Joe Varnadore (08:39):
And then this year you told me that you know, you're on track to do about that again, right?
Justin Bogard (08:48):
Yeah. I don't know if we'll get that many deals in this year, just because of COVID it slowed things down a little bit for a few months, but we're kind of surprised. It seems like the May time frame, things just turned around for people and got really high confidence and we're wanting to deploy more capital. So we're going to do some good deals amount of deals this year 30 or 40 deals probably pretty easily.
Joe Varnadore (09:09):
So this one fellow that had been coming to your meetup, right. Kind of quiet. So he comes in and one day he comes up to you after a meeting and he says, Hey, Justin, look and correct me if I'm wrong on the story here. He said, so basically I've got $150,000. I just, you know, I want to kind of, you know, hand it over to you. And you're going to, I want you to pay me 6% an interest only payment every three months, right?
Justin Bogard (09:36):
Yeah. I kind of dictated the terms, but essentially you're right. There's a person that had a lot of confidence and they liked me and there's a good trust factor. And they saw I was out there and I was putting myself out there, you know, as someone that knows a little bit about the note business and they liked the product that I was going after and they wanted to invest with me. They didn't want to learn it themselves. They just wanted to invest with me. And they wanted to benefit from riding on the coattails of what I've been doing. And so that's how we came up with the agreement. So,
Joe Varnadore (10:06):
And he was just one of these guys that was a, he was a burnout landlord. He was an HGTV watcher, you know, he had some capital and he wanted a good rate of return. Right?
Justin Bogard (10:18):
Right. With pretty much zero work involved
Joe Varnadore (10:21):
And very little risk.
Justin Bogard (10:24):
Exactly.
Joe Varnadore (10:24):
So anyway, so Justin, you took that 150 and again, this is 10 of 50 that you did. And so you took that capital and you ended up buying and selling and buying and selling 10 notes. Right. In this particular pool. And at the end of the day, you know, you made a bunch of money doing that, right?
Justin Bogard (10:48):
Yeah. It turned out to be a lot more lucrative than I thought it was going to be in the beginning, but you're exactly right. I deployed the capital as quickly as I could. And then the agreement was where whatever I'm buying is going to be secured, you know, the loan was going to be secured by that. I just trade loans in and out as I buy and sell them at will.
Joe Varnadore (11:08):
And so really, he just kind of let you use that as a lot of credit almost, right?
Justin Bogard (11:14):
Yeah. Exactly. That's exactly what it was a line of credit with some security.
Joe Varnadore (11:19):
Well, and, you know Justin, we talk about it, NoteSchool with when we do a three-day class, you know, how do we build this? How do we attract these investors? Right. And it's attraction, then it's engagement, then it's nurturing and then it's conversion. Right? And it, you know you nurtured this fella, you brought him into the meetup and you took him through that process. And now he's a just a constant and just one piece of your business. Right?
Justin Bogard (11:46):
Right.
Joe Varnadore (11:46):
And you know, it's just an amazing thing. And actually, I think at the end of the day, you ended up, what, making about, on those with his, you know, with no investment of your own, you ended up making what about 50,000 plus a partial on the other side of that. So.
Justin Bogard (12:08):
Yeah.
Joe Varnadore (12:08):
Yeah.
Justin Bogard (12:08):
Exactly. So I think, yeah, I think you're right. The total wealth creation, I think was 70 or 80,000, the partial obviously helps that tremendously.
Joe Varnadore (12:20):
Right. But yeah, it's the cashflow.
Joe Varnadore (12:22):
Right. So money today was over 50,000 and then money in the future was another 35 or so thousand. So it's about $85,000.
Justin Bogard (12:30):
Yeah. That's pretty nice looking back at it. You don't realize that you're making that sizable amount of money. But for deal that size, I don't know where you can find that anywhere else.
Joe Varnadore (12:42):
Well, and that's true. And you know, to keep investors happy and then it's just one of those things that you know, you just, that's what it is. Right? So, you know, Eddie, why don't you jump on here? And let's talk a little more with Justin about about what he's created here, as far as his business and so on. Good morning, Mr. Speed.
Justin Bogard (13:07):
Hey, Ediie.
Eddie Speed (13:07):
How are ya? What's up pal?
Justin Bogard (13:09):
Doing great, my friend.
Eddie Speed (13:12):
So Justin has been a poster child. I would say for people that were originally just traditional real estate investor types and kind of jumped the fence as you heard him talk about. And you really did it as for a family issue, right? Justin?
Justin Bogard (13:30):
Yeah. This is what I wanted to do as my career. If you, I wanted to be a note investor.
Eddie Speed (13:36):
And you wanted to pick your kids up from school. I remember they were in elementary school and you wanted to be able to pick them up from school. And so, you know, people don't realize this, but you can, you can operate out of your house and in Indianapolis and buy assets all across the country and deal with investors. They want to give you money from all across the country. Right?
Justin Bogard (13:55):
Absolutely.
Eddie Speed (13:58):
So I love this story. This is this, you were just, you were just working a model. This guy did not buy the notes from you, right? He loaned you money against the notes.
Justin Bogard (14:09):
Correct.
Eddie Speed (14:11):
Right? $2 word for that. It's called a what? A Hypothecation?
Justin Bogard (14:14):
Hypothecation, right.
Eddie Speed (14:17):
You don't have to know that word to be able to do this right, Justin? you know, I'm just saying.
Justin Bogard (14:20):
No, he's got to be a little bit creative. Think outside the box.
Eddie Speed (14:25):
Anyway, this is a, I've actually done this a lot in my career. I've tallied up. Maybe I borrowed over a hundred million dollars doing this in my life over a long period of time. But you know, a lot of people don't realize that you don't have to just sell a note. Now, obviously you can sell a payment stream with the note a partial and now I'd sell all the payments. But the other is, you can do exactly this. So you were, you bought three notes and then sold three notes and bought more three notes. And you work, you use this guy's money to basically warehouse your notes until you got them sold. And then you dealt with another private investor who you sold, ultimately sell those notes to. Right?
Justin Bogard (15:12):
Exactly.
Eddie Speed (15:13):
So you are, You were using one private investor to fund your business initially, then that gave you inventory of notes that you could show another private investor and they just picked off and bought those 10 notes.
Justin Bogard (15:27):
Yeah. It definitely created more deal flow.
Eddie Speed (15:30):
Yeah. Why do you like this business?
Justin Bogard (15:35):
It's the flexibility. And it's the, I guess the financial aspect of it, that's just so intriguing. Every note deal is different. You can see a couple of my board back there that I'm working on locally here. It's just fun. It's just running numbers and calculating risk and just, and there's virtually no competition, which is another added bonus to this business. There's not a lot of people doing this.
Eddie Speed (16:02):
There's nobody flipping houses up there either, are there?
Justin Bogard (16:06):
They're flipping houses for next to no profit, maybe.
Eddie Speed (16:10):
Yeah. It's a little bit of a crowded field up there in the house buying world, right?
Justin Bogard (16:15):
Yeah. It's like trying to find a photographer or a landscaper, you know, you can throw a rock out your window and hit five of them.
Eddie Speed (16:21):
Yeah. The other thing that we didn't talk about a lot today in that is I know you've put a high emphasis on not just making current income, you're making a living out of this, Justin, Right?
Justin Bogard (16:33):
Yes.
Eddie Speed (16:34):
Okay. But the big thing is, you're not just making transactional money you're growing wealth.
Justin Bogard (16:40):
Exactly.
Eddie Speed (16:42):
So how often do you keep a residual interest in a note?
Justin Bogard (16:47):
It kinda depends on my current position with our liquidity. So if I don't have the capital to acquire a note, obviously I'm going to defer to who's in my buying list and who I'm talking to currently to sell that loan to, or flip that loan to, and then depending on the investors return requirements, if you will, it depends on if I'm selling them a whole loan, or if I'm going to get involved in a partial with them. Certain investors have certain appetites and they want certain activity. And that's what I explained to them. The more activity we want in the deal, the more money you're gonna make, the less activity you want in the deal and the lower, the risk, the less money you're going to make. And so they kind of fit in one of those categories. And I just figure out which one they go to and just make the deal happen around it.
Eddie Speed (17:31):
You know one of the things that I heard you, you and Joe talking about was your volume this year being slightly off from last year and people go, Oh my goodness, he's not doing this good. But the truth of matter is you bought a lot of assets from us this year, right?
Justin Bogard (17:49):
Yeah.
Eddie Speed (17:49):
And you have been able to reposition those assets. So we own these assets. We sell them to you. And then you've been able to reposition them with private money and correct me if I'm wrong, but your profit this year is better than last year. So it's not number of transactions is how you position. Are you got more juice out of the lemon this year than you did last year.
Justin Bogard (18:14):
Yeah. Every deer, every deer, every year, I'm learning more and more how to tweak my note investing acumen, if you will, to make myself more profitable, do less work, understand risk, better with certain deals and certain situations, and know how to position myself differently. So you're exactly right. My profit margins are better this year than they were last year.
Eddie Speed (18:39):
That's great.
Joe Varnadore (18:40):
And you know, Eddie, we often say, you know, how do you eat an elephant, right? And that's one bite at a time. And so, you know, with Justin and you can, you know, correct me if I'm wrong, but you know, you saw the opportunity, you went to a meeting and you saw the opportunity, and then you just started building on this. Right? You identified what you were great at, right? You identified what you, and this is what we all do. Right? What you work so, or what you needed in your business, and you identified you needed to raise capital. So you started, you know, you started the meetup and talking to potential investors out there and you just walked yourself up the ladder, right?
Justin Bogard (19:18):
Exactly.
Joe Varnadore (19:18):
You found the money. Then you had investors. And so you just created that pool. And you know, it wasn't just something that was just crazy hard. It was just something that you made a part of your life, right? Yep.
Eddie Speed (19:33):
Justin, I'll tell you this. I've had the pleasure of training. A lot of people, how to go raise money to fund their note business. And most everybody that I've seen, that's been really successful this, or just like you. Now, my wife's actually really good at this. Right. And I have a lot of students, but they're just regular people. They're trustworthy. They they're not slick. They don't come off like some slick salesperson. They just, people invest with you because of a confidence with you. Not because you're a slick talker. Right?
Justin Bogard (20:06):
Exactly.
Eddie Speed (20:09):
You're well-spoken but you don't, you don't convey any kind of a slick talker thing. So Brian, I want to invite you back in, want to get a little input from you if I can. And so what do you think about all this? What are you, what's your questions?
Brian Lauchner (20:27):
Yeah. It's actually more some observations that I find really fascinating that I think a lot of the viewers are maybe even thinking one of which is just the idea that, you know, Hey, Justin, didn't start with, you know, an investor who had $10 million and he said, let's get it. Let's find a place to put this money. Right. He started very, very somewhere to , I'm assuming
Brian Lauchner (20:48):
A lot of you, right. Maybe you're investing right now. Maybe you're trying to do some deals, maybe deal flow is a problem. And in Justin's situation, he had to learn that skill set. But what's unique about learning from somebody who's been doing this for 40 years, is it solves the two problems that everybody's trying to figure out is where do I find the deals and how do I find the money to do the deals. Right. And I just think it's encouraging that you know, what I consider Justin to be just the average investor, he's just like you know, a lot of those other house slippers until the light bulb went off and said, Hey, there's this niche with less competition. And more importantly, they're going to teach me how to raise money. And clearly I think he's a great case study because it's working.
Brian Lauchner (21:28):
Right. But even to that point of, from the deal side that you mentioned, you know, he's found, look, even if I can't you know, find a deal from a local person, look, I can buy Eddie our inventory from Eddie. And that's, I think a big thing too. So for those of you who are just trained to learn a little bit more about what notes look like and how do you figure out what's a good note, what's a bad note. How do I break it apart? I'd really, you know, encourage you to go to our NoteSchool YouTube channel and go to the playlist called Feeding Frenzy Friday, where each week we break down one of Eddie's assets and we actually talk about mastering due diligence. We actually talk about the pros and the cons and what makes this a good note versus not a great note.
Brian Lauchner (22:08):
And so it's a great way to, I think really really dig into some notes without feeling like I just got to buy one to learn everything. Right. and then if you, again, if that's not enough learning, man, come down to www.NoteSchool.com/TV and learn a little bit more about what Eddie's teaching, I'm teaching classes on this thing pretty regularly, and you can get your education built layer. What are, as Eddie says, you know, one paint of one coat of paint at a time, as he says. And so that's some really, really great ways to kind of get engaged as well as just continue to check out these videos, like these videos, as you, as you see them subscribe to the channel and obviously turn on the notifications so that when we're live, you can engage with us. Yeah. Anything else, guys.
Eddie Speed (23:00):
Justin, just to close out we, got listeners that are in all kinds of situations, but a lot of listeners are here today, started at, I start out with a story, very similar to how you're started, right? They're looking at the market there, as you said, it's very competitive in the house buying space where people say, I don't even try that, you know? And just like, like I just wanted to talk just a second about we have all these things, like, you know, how do you eat an elephant one bite at a time? What were those first five bites? Like I understand you went to NoteSchool, we're not going to get into all of the waterfall of NoteSchool at this point. I'm just saying, what were the first five bites you to get started?
Justin Bogard (23:47):
Well, it's kind of understanding, do I want to invest in this stuff and build my retirement, or do I want to make a business out of it? And I felt like there were two paths to go down. Either one is fine, which path was I going to go down? I obviously chose the path to create a business out of it and to learn the note business which I did, and then just hold myself accountable and try and learn the business and learn how to do this stuff and buy my own deals and walk through, you know, the entire process from A to Z and then document it and then repeat that and ran. So then also learn how to engage with other investors and show them what I'm doing. And then eventually things just kind of align and they mesh and move forward.
Eddie Speed (24:29):
That's awesome.
Joe Varnadore (24:31):
Yep.
Eddie Speed (24:31):
That is awesome. You know and as as we say it, I think a key thing you, you're a big motivator that when you started with this is that you want to be able to pick your girls up from school. And then you have the karate thing and you saw all these real estate investors and they were like working a day job. And then they were trying to go buy houses at night and they were driving all over town and stuff like that. And you just said, I remember when we very first met, you said this business fit my lifestyle. It fit what I was looking for as my lifestyle. And so let me just say, I'm very proud of you. I get to train a lot of young smart people, but I'm really proud of you. And I hope one day when I'm old, you want to push me around in a wheelchair because I helped you show how to make, to grow some wealth.
Justin Bogard (25:26):
I owe you that much.
Eddie Speed (25:27):
You'll buy me some new Nike shoes or something. I don't know.
Justin Bogard (25:30):
How about some Texas cowboy boots and a hat.
Eddie Speed (25:34):
That too.
Eddie Speed (25:36):
Brian, close us out pal.
Brian Lauchner (25:38):
All right, my man. Well, thank you, Justin so much for joining us today. Really appreciate that Joe and Eddie as always. It's a pleasure. It's great seeing you guys we will plan on seeing each and every one of you next Wednesday, when we are live. Once again, out here on NoteSchoolTV at 11:00 AM central time. Come get engaged, come get involved in most importantly, go take action. We'll see you next week.
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