Bill Fairman (00:07):
Greeting! It's Bill Fairman, Jonathan Davis and Wendy Sweet.
Jonathan Davis (00:11):
Hello!
Bill Fairman (00:11):
And Carolina Capital Management. Welcome to our show today. Wendy and I are kinda though walking COVID wounded right now. We're both recovering. Wendy has got her halo on she's ready to move on.
Bill Fairman (00:30):
No, no, no, not yet. No.
Wendy Sweet (00:36):
Not yet. Thank you, Jonathan!
Bill Fairman (00:36):
I'm going to apologize in advance if I cough and I don't get to the call of button quick enough. Jonathan, I didn't get there quick enough.
Jonathan Davis (00:48):
And don't forget guys that you can share, like, subscribe, click in different places, wherever it is on your screen. Also there is a comment box and if you have questions, feel free to put all your questions in there and we will do our best to get through them all and answer them as coherently as we can
Wendy Sweet (01:10):
If that could all possible, right?
Jonathan Davis (01:12):
All possible.
Bill Fairman (01:14):
By the way, we are Carolina Capital Management. Our website is CarolinaHardMoney.com. If you're interested in borrowing money, click on the apply now tab. If you're interested in passive returns, then click on the investor tab. You did talk about in the chat box in case anybody has any questions, we have a great guest today. I will have to mention before we get started. The only good thing about COVID is I lost eight pounds and I didn't have to do any work for it.
Jonathan Davis (01:50):
You just had to suffer.
Bill Fairman (01:51):
That's right.
Wendy Sweet (01:51):
Congratulations.
Bill Fairman (01:51):
Wendy, how's about introducing our awesome guests who, I don't think he knows this, but he and I worked at the same company,
Wendy Sweet (02:06):
[Inaudible].
Bill Fairman (02:06):
Bayview. That's where I got my commercial start and I know that's where he got his start and notes. So
Wendy Sweet (02:16):
Very, very interesting. Well, you know, Bob Repass is a great guy. He's a brainiac, I guess this is a great way to describe him. He works with Eddie Speed in the Note School and Colonial Funding. It's another great fund that they have and they're the top people in the note space. If you're buying and selling notes and want to learn anything about notes, you need to be connected to these guys because then, I forget how many deals they said they've done, but then I'm sure Bob will talk about it, but it's like thousands and thousands and thousands. It's just amazing, what they've been able to accomplish. So Bob, welcome to the show. We're glad to have you.
Bob Repass (03:09):
Wendy, Bill, Jonathan. I'm glad to be with you guys and super excited and Bill, I do have to admit, I was not aware of the fact that we never crossed paths at the same time of Bayview but I was there for 12 years and learned a lot and did a lot so glad to be with you guys today.
Bill Fairman (03:30):
Bayview is quite a company. They have launched many careers out of that place and thankful that I had the opportunity to work there.
Bob Repass (03:42):
Yeah, it's funny. Before I worked at Bayview, I worked at the associates here in Dallas and the associates in Dallas has the same reputation as Bayview. Everybody you run into across the industry at one point, worked at the associates. So I've been fortunate enough to work in two of the places that basically train everybody and then they either stay with them for awhile or go on to better greener pastures. So I'm glad to be with you guys and I'm happy to talk about no expo that we have coming up as well.
Wendy Sweet (04:13):
Awesome. It is such a small world in this space that we're in, isn't it?
Bob Repass (04:20):
Yeah, it is. And I know I've seen you guys at various, um, trade shows where our focus was raising capital, you know, meeting with accredited investors and so forth. So we've got to spend some time to get to know each other and talk about what your fund offers and what our colonial fund offers and it is a small world.
Wendy Sweet (04:42):
It really is. And a lot of people say, why would you have somebody that could be your competition on your podcast? And I think that's the funniest question ever. Why would you not want to have a group of awesome people around you that are all going for the same goal, then operate from scarcity and not share what you know, and who you know the connections and that kind of thing. So we are thrilled to have you here and well, we just, we want to hear about the expo that's coming up. You know, I've heard about it for years. I've been to it actually a couple of times and it gets bigger and bigger and this year, of course, it's odd because it's online. So tell us what's going on.
Bob Repass (05:33):
Well, I wanted to go back a little bit to your comment there about competition because that is part of the Genesis of Note expo. We look at it more as, you know, counterparties, right? Because there was a lot of people were on the surface may look like they're a competitor of colonial or even of Note Schools, you know, everybody's got a coaching program or everybody's got some educational piece but like you said, surrounding yourself with people, prepares you for opportunities. You may be able to do business together, there might be somebody that I know that there's a client of mine that I can't fill their need at this particular time that I could refer to you guys or somebody else. So we've always tried to build an inclusive atmosphere and deal as more as clients and counterparties, as opposed to competitors. Like you said, this is my world and stay out of it and that kind of stuff. So just as a little background, I started in the seller finance and just kind of note space way back in 1990. I started with a company based out of Spokane Washington called metropolitan mortgage insecurities and I worked with them and it was at that time that I met Eddie Speed. Eddie was brokering deals to metropolitan and I didn't deal directly with Eddie at the time, but I met him at various events and got to know him pretty well and then in 1997, I moved to Dallas to come to work for the associates and that's when I started dealing face-to-face with Eddie and he would aggregate loans and sell them to us and we actually sat on the opposite side of the desk for many, many years. And that continued when I joined Bayview in 2000 and then in 2012, I left Bayview and Eddie was looking to start a capital fund in addition to his Note School and colonial funding trade desk. So I came on board with him and we created Colonial Capital Management and started our family of capital funds. Right now we have a clonable impact to capital fund where we have about $20 million under management. We buy and sell mostly residential notes anywhere from mom and pop seller finance notes, all the way through a scratch and dent bank originated, brief performing loans and so forth. So, uh, we're very active in the neuro space. Not only do we have a very active educational program under Note School but we are in the day-to-day business. So this year we'll have the seventh annual Note Expo. So when I first came on board with Eddie, we had known each other through the years and we've got to various trade shows and we realized that there really needed to be the industry event where everybody could come across. Like I mentioned a minute ago, whether we're perceived as being competitors or what we want to industry leaders, we wanted everybody who was in the note business, that if you surround yourself with people that are active and knowledgeable, then no space, you're going to pick up some nuggets on what you can do to implement your business. So we started this seven years ago, and as you said, it's one of the biggest trade shows out there. We typically have over 500 attendees, but 2020 is the year of COVID and after much discussion and thinking and praying about it, we decided, you know, we have to go virtual this year. So Note Expo 2020 will be all virtual. It takes place a week from tomorrow, which is November 6th and it runs for two days, November 6th and seventh. So you can go to NoteExpo.com and register today, there's still time to do that. And if you enter the promo code VIRTUAL, all capitals, you'll receive a discount for, for doing so. So, Wendy, I know, I'm excited that you're going to be on the agenda this year and we're looking forward to having you participate with us as well.
Wendy Sweet (09:24):
Yeah, I'm looking forward to that too. I'm honored that you guys had invited me, that's awesome. I'm really looking forward to it. What kind of a platform are you guys using when you put this virtual event on?
Bob Repass (09:42):
Well, it's really interesting because believe it or not, there were several options to choose from, right? I mean, at first we were like, Oh, we're going to have to give zoom and figure that out because that's all you heard about during work from home thing but you know, we researched some, we reached out to some folks that were also doing some virtual conferences to find out how their experience went with various vendors. We selected a platform called Hubb, H, U, B, B and I mean, I have to admit it's going to be pretty slick.
Wendy Sweet (10:15):
Is that part of Hubspot?
Bob Repass (10:15):
It's going to be where you walk in and it's, you know, it looks like you're walking into it or you trade show. It's going to have virtual exhibit booths that are going to have the ability to do zoom and live chats with the exhibitors and their staff. Um, and then we're going to have our presentations virtually, but then there'll be sit down or panel discussions or even general sessions. So we've got several keynotes, Eddie isn't going to do a keynote. I believe you know Matt Andrews, Matt's going to do a keynote on how important it is to invest in people and you know how Matt is so he's not just gonna stand still behind the camera. He's pretty energetic. So I think he'll fire up everybody and get them inspired and then one thing we're gonna do this year that we haven't done in the past that I'm really excited about and this is where Wendy comes in, is we have reached out across the industry and selected leaders and experts from various parts of the business and we said, we're going to sit down with them and do a one-on-one conversation. So it's not going to be like an interview, like you're on 60 minutes or something like that. This is going to be like, we're sitting around having a cup of coffee and we're going to sit down and just talk about 2020. How have you positioned your company heading into 2021? What kind of challenges or opportunities that are on your radar and what are you looking forward to? So, Wendy, I know you're going to be doing one with one of our co-hosts Brian Lochner and Brian's a great guy. I think you guys will have a great chat but I think just, I think we're going to do 15 or 16 of these one-on-ones just being able to walk to sit down and watch I'm going to interview some folks, Eddie's interviewing some folks, Brian, and then our Giovanna doors also. So we've broken them up into like four categories and it covers everything from your world apart, money lending to people that run capital funds as well, to service providers. I'm bringing in an expert who Bill, also used to work at Bayview and Inner Bay back in the day, Scott Barry, who is going to be, he now works at trip data analytics, a huge commercial data aggregator. We're going to talk about some opportunities that are coming along in the commercial Note Space so, I'm excited about that. Traditionally, we focused on residential but as you guys probably know with the pandemic going on, some of these commercial sectors, especially retail and hospitality are just getting beat down big time, especially from a cashflow perspective so we're going to talk a little bit about the commercial note space. We've got some fund administration and accountants that are going to come on and of course our friend Jeff walks and is going to be participating along with Nathan Law and Quest Trust company and talk about investing in self-directed IRA. So, I mean, look, two days, if you don't, if you want to learn everything there is to know about passive investments, the Note Space entrepreneurship, you need to sign up for Note Expo and take two days, sit down, listen, as you register, you also have 30 days access to the recordings afterwards. So, I think it's going to be a wealth of information.
Wendy Sweet (13:32):
That's awesome and I actually have a Quest Expo shirt on there.
Bob Repass (13:36):
Well, we're going to have to get you a Note Expo shirt to wear
Wendy Sweet (13:42):
That's exactly right.
Bob Repass (13:42):
There we go.
Wendy Sweet (13:42):
You know, it's amazing the depth of information that you're covering in this and I think what's really key too, is you are speaking with people from across the nation, in different markets across the nation and asking them what they're doing to control this whole COVID crazy event that's been going on for all of us, because I think everybody has taken this from a different approach and hearing what, you know, what all the options are out there is really, really important. You know, when we run into troubles, so many of us kind of close off from others and bury our issues or our troubles instead of reaching out and sharing with other people because we're all going through it and it's important that you're giving people the option to hear, all the different things that people are able to do to turn this lemon into a true of lemonade, right?
Bob Repass (14:53):
Yeah, absolutely and one thing we've always had at Note Expos, we've had people come in from all over the country, right? And to your point, now they've kind of been shut down and they've almost been, I don't want to say hibernating, but they've almost withdrawn into their own little community there and they really only know what's going on in Texas or California or Ohio or wherever they may be located and now through, you know, virtual Note Expo, they're going to be able to hear from folks that are doing business in the Northeast, the Southwest, the Carolinas, like you guys, and they're going to know what struggles and what opportunities people see and that they've overcome and that is exciting and on one hand is going to be great educational knowledge and on the other hand, I think it's going to be motivating and inspirational because they're going to see folks that have had to adjust their businesses in order to survive and they're going to get some great tips on what people did and they're going to say, Hey, that's something that I can do. I can shift my business around and, you know, some people may need to be conservative and dial back and some people may be sitting on some cash thinking, I can take advantage of some of these opportunities that are coming and if they follow their model and they don't get overly aggressive and do something crazy, there are some opportunities to generate some good wealth I think, going into 2021.
Wendy Sweet (16:19):
I agree with you a hundred percent, you know, one of the things I think we need to take note of is that what we're going through now is completely different from what happened in 2007, 2008 and I'm just wondering how differently things are going to look rather than seeing as many foreclosures as we saw, you know, now because of what banks have been through, do you think that they're going to be more notes available rather than REO's? I mean, what, how do you think that's gonna come out in the wash? What are your thoughts?
Bob Repass (17:03):
Well, you're right. I mean, this is completely different than '08, '09. That was a mortgage crisis where people just threw money at anybody that wanted a property because they just thought the values were going to escalate, escalate, escalate forever. Now, the recovery over the last 10 years or so, people, there's not as many underwater properties so people have some equity in their properties. So even if they get to a point of distress where they can't make their mortgage anymore, they can liquidate their property and still probably get out of that and move on to, you know, another lower lease, expensive. This is more of a health crisis, right? And as I mentioned a minute ago, I think it really impacts the commercial world because a lot of have had to shut down. I don't think we're going to see a flood of REO as you guys know, there's been federal and state foreclosure and eviction moratoriums that are in place, federal have expired now, a lot of the States are expiring and, or getting ready to expire, but what are the banks going to do? You know, there's 3 million people right now that are in forbearance plans between Freddie and Fannie and FHA and VA. There's probably another 4 million that are delinquent that are not in forbearance plan, where all they have to do is really raise or in order to get it for granted plan. To your point, what are the banks going to do as far as their balance sheets? Are they going to keep these loans on their balance sheets or are they going to liquidate them as semi performing or non-performing loans, recoup their capital and move on? I think the key to that is once you see banks starting to write down assets, charge them off on their books, so to speak, they basically go ahead and take the loss now, so they could turn it around in the first quarter, second quarter of 2021 and sell those assets and believe it or not when they sell a loan that they've already charged off on their books, they have to count that money as income next time. So I think for the most part, if they pursue foreclosure, it'll be on the properties that they think they have the biggest amount of equity cushion in there with the borrower and I think they'll encourage the borrower to try to sell the property before they had to go through the foreclosure process. I don't think they want the headline risk of being the ones who foreclosed on people during, or immediately after a pandemic.
Wendy Sweet (19:25):
Right. Do you think this is gonna open up more opportunity for second position notes since there's so much equity, so much more equity in properties now than it was in '08, '09?
Bob Repass (19:39):
I think so. I think that's an opportunity that people need to have on their radar. It's funny, you know, if you look at the statistics now that if you're going to get a loan at Fannie or Freddie, I think the last stat that came out was the average customer had to put 19% down and the average loan size was $370,000. So you can do the math on what roughly 20% down is on a 37 or a $370,000 property. You got to have almost 80 grand in cash, but now, right? So what are you gonna do if you don't have that much patch, that's going to open up an opportunity for seconds, it may open up an opportunity for some seller financing instead of traditional bank financing and that may be broken down into a first and a second. To borrowers that for no other reason, um, just don't have the doubt, but they may have great credit score and they may have a great debt to income ratio, but they don't have 80 grand, you know, to put down. So they're what we referred to as a penalty box buyer, you know, they've put in the penalty box, but for no other reason than to just don't have that much cash. But now, I think there was a question what a second position was, if I saw that pop up on the screen. Obviously it was a first lien and secondly, a mortgage. So if you're buying a property and let's say that it's so for a hundred thousand dollars and you get a $10,000 put down out of that 90, you may do a first position of 70 and a second mortgage behind that for $20,000 and then you have a first and a second.
Bill Fairman (21:16):
So Bob, you know, we we've been in the mortgage and investing business for years and years and thanks to Scott for reminding us that not everybody knows what a note is. So give me your crayon version of what a note is. Now, I love the way Eddie does it on his PowerPoint, but you don't have to go that far.
Bob Repass (21:44):
Well, Eddie's PowerPoint tells you that everybody knows, but the note is if you ever written a check, right? It's just pretty much paid to the order up. It is a promise to pay. That's why it's called the promissory note. So Bill, if I'm going to borrow money from you to rehab a house and sell it, I'm going to borrow $50,000 and I'm going to sign a promissory note that I am going to pay you back over whatever the specific terms are, whether it's going to be a 30 year mortgage or a six month hard money loan, and I'm going to pay you per those terms. You're going to secure that loan by a mortgage on the collateral, whatever, whether it's a house commercial property, whatever I'm borrowing the money against and if for some reason I'm unable to perform all that note, you have the ability to foreclose on that property that you have as collateral. How's that for note 101?
Wendy Sweet (22:36):
That's good.
Bill Fairman (22:36):
We just want to say, though, a note in and of itself is an unsecured instrument. You have to have a mortgage or deed of trust to make it a secured instrument. So you got to tying it to a physical property so a note in itself is just a promise to pay, tying it with a mortgage or deed of trust, some kind of security instrument means it's a promise to pay and if I don't, here's this asset that you can have
Bob Repass (22:59):
Right. Exactly, Jonathan, I mean, same thing that you buy a car, right? I mean, you buy a car, you sign a note. If you don't pay, they come repossess your car and if you're, you know, a passive investor and you have a good relationship with a business owner and he just needs $20,000 for his business, and you want to do an unsecured loan against Tim, you can do that if you wish but we prefer to deal in the real estate secure notes, right? We take back a mortgage or a deed of trust, depending on whatever state it is and we have that as collateral for that promissory note. Yeah.
Bill Fairman (23:36):
And, and we're all, in this industry, we're biased. We would much prefer to control the asset without having the responsibility for owning the asset. That's why we're all in the note business in some shape or form. We, you know, we write new notes. You're in the business of acquiring existing notes and then also at the same time with the seller held seconds. If you're the owner of the property, you're obviously originating those notes as well, but you're in such a much better position when you're the note holder, as far as I'm concerned, because again, you don't have the worries of the tenants, the toilets, the trash, the insurance, the taxes. It's not your responsibility. You're still creating passive income through the payments and you don't have all the hassles and you're in a much better position than the owner of the property because you're in it for much less than they are so all the risk is on the borrower.
Bob Repass (24:46):
Yeah. Eddie likes to say, we would rather be the bank or the landlord, right? So as you own the mortgage, you're in the same position as a bank that would hold a mortgage. Nobody calls us up in the middle of the night, tell us the air conditioner went out. We have to go fix it.
Bill Fairman (25:01):
Oh, and you don't have an attorney calling you up and saying, Oh, my client slipped and fell on your property. That's not my property, it's theirs.
Bob Repass (25:06):
Exactly.
Jonathan Davis (25:11):
It sounds like it can get complicated quick in the note space, mortgage space. So who can invest in these notes, who can take advantage of this? Do you have to have, you know, education through finance or who can we, I guess who can take advantage of this through Note School or through a Note Expo?
Bob Repass (25:35):
Right. Really, I mean, if you're an entrepreneur or a real estate investor and you want to get, become part of the note industry, obviously there's educational programs out there, we have them at Note School. You can go to NoteSchool.com. We have everything from online draining to one day training, three-day training classes and so forth. So we have those, you can attend industry trade shows like Note Expo. And I really think, obviously I think it's important to go to a formal training class, like the three-day class at node school, right? But that's only going to be the tip of the iceberg. You have to surround yourself with folks, network that you can rely on for advice and support. To Wendy's point earlier about, you know, people being from all over the country. Well, we encourage people to buy assets all over the country, not just in their own backyard. So you go to an event like Note Expo, you're going to meet service providers where if I'm in Texas and I buy an asset in Charlotte, North Carolina, that I can outsource that and have boots on the ground there, I don't have to drive to Charlotte to go check out a property, right? So you build that network. We have folks that are retired from corporate jobs that are now investing in notes. They're using their self-directed IRA. We have real estate investors that are doing fix and flips and buy and hold and then they also added notes to their business. So we kind of cover the spectrum on who wants to get into the note business and an event like a Note Expo, we're going to show you all different kinds of paths, and it's not just going to be, you know, you're just going to hear us talk, you're going to hear 20 people talk from across the industry about their experiences. And that's the beauty of going to an event like that, where you can learn from each other and you're going to have their information to do future business, right? If I have something in, when do your bills neck of the woods, I can always call them up and say, Hey guys, I got some issue, can you, you know, somebody that I can have right by my property, or I've got somebody looking for property in your market. I want to refer them to you. Can you handle them? And, you know, we'll work out a deal where I'll refer them to them to take care of that person's needs. So it's all give and take. My only advice to everybody is look, when you're building a relationship, it's always relationships over transactions. Don't try to do one transaction and, you know, not build a long-term relationship because that is a give and take relationship we're in a give and give, and all you do is take from people, our relationship's not going to last for a long time.
Wendy Sweet (28:06):
You got that right. You know, I remember when I first really started learning about, notes school and the note business, I had to sit and listen to any three times before I got it. And I'm in the note business
Bob Repass (28:24):
Now, is that because of Eddie's accent?
Wendy Sweet (28:28):
Well, let me tell you something! That's my Eddie impression
Bob Repass (28:35):
Anybody who hasn't met Eddie has an Eddie impression. The one I have that Eddie impression is that one of his famous quotes, I'm out of soap so it's about time to wrap up or, this ain't my first rodeo.
Wendy Sweet (28:52):
He is so funny. But you know, when I, when I first got into learning about this, I assumed that you had to have a lot of money to be a note buyer and I quickly learned that that's absolutely not true and I learned that through Note School.
Bob Repass (29:07):
Yeah. There's a lot of people that get started in the note business and in addition to wanting to generate wealth immediately, they need to generate income and more specifically, they need to generate fee income. So, you know, we have programs, basically where you can flip a note, just like you would flip a house. You can find somebody that has a note to sell. You can find it an investor like colonial, that's looking to buy it and then you can make a fee in the middle for hook and the two of us together and you can do that. You can continue to do that as you generate income and then sooner or later, you get to a point where you flip a note, you buy a note, you flip a note, you buy one, and then you're building up your own portfolio as well.
Wendy Sweet (29:49):
I love it. And I love how you can just chop it off and sell off partials the front end, the back end and there's just, I always tell people whenever I'm doing any kind of a speaking engagement, I always tell people that if you understand notes and how they work, because it's a huge puzzle but if you can get to know notes, there will be no opportunity that will come across your desk that you can't take advantage of in some way, shape or form and I don't mean take advantage, but I mean, you can't participate in, there's always a way to work it out if you understand the note business.
Bob Repass (30:31):
Yeah. That's a great point because a lot of people spend a lot of money on marketing and then generate leads and then all of a sudden they throw 8 of the 10 leads in the trash can because they don't know what to do with right. There's ways to take everything that comes across your desk and either take advantage to use your term yourself, if it fits your box and your buying parameters or make money off of it as, as fee income, by sending it to somebody and kind of brokering that transaction. One thing that I do want to kind of put a little plugin, look, there's lots of ways to learn the note space and we cover a lot of it at Note Expo in different strategies. But I can tell you, one thing that you mentioned at no school with Eddie. Eddie is probably the most creative person as far as notes that I've known over the last 30 years, right? Typically, you know, we sit back and we talk about, well, we buy loans from banks and we buy loans, you know, one-off mom and pop seller finance. So those are typically, you know, normal transactions, but there are creative strategies whether you're buying in your self-directed IRA and as you mentioned earlier, selling a partial, which is part of the loan for a certain period of time and then it reverts back to you. Or if you're doing creative financing where you can buy properties on terms and have that seller take back seller financing at terms that are favorable to you so you can own that asset and then resell it. So the creativity piece is what I think we cover at Note School, as well as Note Expo. I know Nathan Law from Quest is going to talk a lot about his creative strategies, investing in IRAs, that is Jeff Watson so we have some creative geniuses, for lack of a better term, that'll be participating as well but if you want to go beyond just the nuts and bolts of buying and selling notes and get to the creative part, then I encourage you to go to NoteSchool.com and dig a little deeper into us.
Wendy Sweet (32:20):
Awesome. That's awesome. Can you give us a little more detail of how they can sign up, about how long is the day going to be? What can they expect?
Bob Repass (32:31):
At Note Expo, it's Friday and Saturday, we're going to kick off each day at 9:00 central time and we'll go to, 5:30 on Friday and 5:00 on Saturday and one thing that's really good is that we always do typically in person, but we're going to do virtual VR hub website is where you're going to have virtual networking breaks, morning breaks, afternoon breaks, and lunch breaks, where you can go to the exhibit hall and interact with the exhibitors vendors sponsors but at 5:30, we're going to have a virtual happy hour where we'll all be able to get together and everybody will be able to interact with other attendees as well, which is what you usually do at a trade show. You know, you kind of sit around and have a beer or a cup of coffee and sit together and lunch and you'd get to know somebody from either your market that you weren't aware of or some other market across the country that you can rely on and you build those relationships so we're still going to have that, but it's going to be virtual. We're going to have a virtual happy hour where we get together and folks can interact with other attendees, some of the speakers, some of the other experts in the industry. So we're really looking forward to that. Again, just go to NoteExpo.com and there'll be a place for a promo code and you just type in virtual, make sure it's all caps and you'll receive $100 off registration.
Wendy Sweet (33:52):
Oh, wow.
Bob Repass (33:52):
And like I said, it starts a week from tomorrow so it starts November 6th and it runs on Friday and Saturday from nine, basically to 5:30 each day and we have it, like I said, in addition to the breaks, everything else is jam packed with content, but you're going to hear some of the top leaders across, not only the no space, but the real estate investment space as well.
Wendy Sweet (34:19):
That's awesome.
Bill Fairman (34:19):
Well, the great thing about having a virtual happy hour is that the alcohol is a lot less expensive
Bob Repass (34:27):
And you could always turn the camera off.
Bill Fairman (34:31):
That's right. And you get to drink what you like, not what they have available. We did have a question here from Scott again, he was wondering if all the income that you received from notes as interest, and I know you covered a little bit about that, but the answer to that is not necessarily. You would think it would be the interest, but there is interest, but there's other ways to make money with notes as well.
Bob Repass (34:58):
Yeah. And like I said, there's different ways to account for it. Obviously when you buy the loan, you're going to get the principal and interest payments coming to you so you're going to recoup some of the principal you've spent in getting that asset. You're going to receive the interest as well and then you can, like you said, there's different strategies on what you can do with that money as you collected and actually, we have our fund accountant and auditor that is going to be on talking about different strategies to take advantage of. As you guys know, running a fund, sometimes you run into, you know, Phantom income, Phantom losses, a little gap accounting, and some of that just gets everybody's head spinning, but we will try to break it down on a level that the audience can kind of wrap their arms around with and at least be able to go down the road afterwards and follow up to get more details.
Bill Fairman (35:48):
Yeah, it's funny, the new tax law in 2017, which really didn't take effect until the 2019 tax year reclassified passive income through interest as non passive income and that really freaked out a lot of IRA people. That said, owning a note and receiving the vast majority of the income through a fund being from interest in loan fees is still not going to trigger the UBIT tax that people are worried about. I found out they're still the best way to invest in your IRA. One of the problems that we've always had with government is that when they write a law, they tend to leave too much open for interpretation but from the folks that I have spoken with, better familiar with, IRS folks, they are not very concerned about the reclassification of passive and the non passive income so I'm sorry I got into the weeds with that, but I have had some questions about that and I have spoken with several CPAs and people that are familiar with IRA tax. Again, I'm not a tax attorney, or a CPA.
Wendy Sweet (37:22):
[Inaudible]
Bill Fairman (37:24):
Get fact with your own.
Bob Repass (37:28):
There you go. That's our typical disclaimer.
Wendy Sweet (37:31):
That's exactly right.
Bob Repass (37:33):
You do not give tax or accounting advice. We can connect you with some experts that you can reach out to for that. But other than that, that's all we do is give some direction.
Wendy Sweet (37:43):
That's fine. I think that's probably the final, best point to end this with is the networking that you will get from this event, you can't pay for it. It's absolutely priceless because there there's such a variety of people that will be here and will be able to help you and connect you or direct you to the right folks that you need to be speaking with.
Bob Repass (38:11):
Yep. I agree. Well said, Wendy
Bill Fairman (38:13):
I was going to say, yes, you can pay for it and it's preferred to be paid for. However, getting a lot more value out of it than the actual price.
Wendy Sweet (38:24):
Right. And you know, I always say it to people that go to any of these events, whether virtual or whether they're live, the people that you meet when you go to events like this, are people that may two years down the road end up being the best friends you ever had and maintaining those relationships, growing them, it's so important to just not, you know, blow it off, throw the business cards in your desk or by the trash and not mess with them. It's really, really important to connect and stay connected, even if it's just a quarterly, Hey, how you doing was wondering how your business is going? Something simple, just to keep in touch with people, because you will have an opportunity to deal with everyone you meet at some point.
Bob Repass (39:17):
Yep. I totally agree. And that was part of the atmosphere we like to create a Note Expo. Is just to give you a chance to connect or even reconnect with folks. Sometimes it's just once a year, maybe that's the only time you really get to sit down and talk with someone but yeah, I mean, I do business today with people that I've been doing business with for 20 or 30 years and you may not hear from them for a year or for six months, and all of a sudden they get a deal come across and they give you a call and it's like, Hey, I think this is something that'll fit what you guys are doing.
Wendy Sweet (39:50):
That's awesome. That's awesome, Bob, thank you so much for taking time out of your day to share what's going on at the Note Expo. Again, if you want to get signed up for this, you just go to NoteExpo.com. Make sure you type in the word VIRTUAL, all caps to get your $100 discount. That's awesome! That you're offering it and if I remember, you said that you can see the recordings for 30 days afterwards. Is that what I remember hearing?
Bob Repass (40:21):
Yes, that's correct.
Wendy Sweet (40:23):
That's awesome.
Bob Repass (40:23):
So you'll have access to those so you can re-watch the ones that, you know, you may have gotten a little bit more down in the weeds and details and you might need about. Let me rewind that and watch that again so do that and, guys, I appreciate you having me on there. Stay strong, get well and Wendy, I'm looking forward to seeing your interview, the challenges and opportunities that you guys see coming down the pike. So I look forward to seeing you guys at note expo and hopefully all your viewers as well so thanks again for having me on and I appreciate it.
Wendy Sweet (40:59):
Thanks so much.
Bill Fairman (41:00):
So Bob, hang out in the green room here for a few minutes as we close out the show, thanks everyone for joining us. My name is Bill Fairman, that's Jonathan Davis and Wendy Sweet. We are Carolina Capital Management. Our website is CarolinaHardMoney.com. If you are a passive investor looking for passive returns, click on the investor tab. If you're a borrower looking to borrow money, then click on the apply now tab. And don't forget to share, subscribe. I didn't know the bell but there's a bell, like, all that kind of stuff. We're going to, pardon me once again, the walking wounded. We'll be back next week and hopefully we'll be in a little bit better shape
Jonathan Davis (42:05):
That's right.
Bill Fairman (42:05):
Have a great day
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