Buying Non-Performing Notes with Martin Saenz

Episode 300: Buying Non-Performing Notes with Martin Saenz

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REIS 300 | Buying Non Performing Notes


Coming from a corporate job and transitioning into the note investing space can be difficult, most especially with the nuances involved in it. That is why it helps to know your way around it, and what better way to do that than to learn from a professional. In today’s show, host Mitch Stephen talks with note investor and author Martin Saenz about his journey from the corporate world to becoming an investor and entrepreneur. Circling down to his methods, Martin shares his knowledge on buying non-performing notes and takes the loan modification angle on foreclosing junior liens. On top of that, Martin speaks about his upcoming Note Investing Fundamentals Workshop that aims to help people to think more like a business owner in the note investing space, proving once again that the cycle of getting into this industry goes back to helping others.

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I’m here with Martin Saenz and we’re going to be talking about discounted notes. I wish I could buy all the discounted notes in the world, but it’d be the shortcut to what I do. I go ahead and buy the house and then create a note on the house. I have to go through all the stuff in between. It’d be a lot easier to buy a discounted note. Sometimes it’s hard to control your inventory. That’s why I do what I do. I have bought discounted notes and notes without any discounts because they didn’t need to be discounted. We’re going to let a professional talk to us about it. Martin, how are you doing?

I’m doing good. How are you?

I’m doing pretty good. Where are you located? 

I’m in Central Virginia outside DC.

I’m in San Antonio, Texas. It’s in Canyon Lake, just a little bit north. No one knows where that is so I say San Antonio.

I know where Canyon Lake is. I’ve been there.

Didn’t you go to UTSA, the University of Texas at San Antonio?

I did.

Let’s talk about a little bit about your history first. How old are you? 

I’m 44 years old.

When you hit the pain point enough, it will motivate you to make a change. Click To Tweet

When did you start the real estate endeavors?

I started small business ownership in 2004 when I was fired from my job.

What was your job?

I managed a call center with four major retailers with about 140 employees.

Why did you get fired?

I didn’t know it at the time. I had gotten out of school from Drexel with my MBA. I was going into the corporate world because that was always the thing to do. It was to get that safe and secure job after a business degree. I didn’t play politics well, so I learned that in Corporate America, it’s not all about the value that you’re bringing to the table. It’s about how well you’re playing the politics end of it.

That’s one thing about big corporations. If you don’t agree or someone above you doesn’t value you for whatever reason, right or wrong, you’re probably not going to get the bonus, move up the ladder or anything else and that’s a shame. That’s one of the reasons why I elected self-employment. I rise or fall based on my own initiative. I’ve got no one to blame but me. I can look in the mirror every morning to go, “Whatever happened, it’s your fault, good or bad.”

I still do that quite often. I’m sure you do as well.

Let’s explore that a little bit. There’s also this thing of taking the leap. There are a lot of people out there that are on the verge, contemplating or wished they had the nerve. Let’s talk about how unnerving it was or how calm you were. Tell us about that leap. Was it nerve-wracking? Had you been planning it?

Like anything else when you hit the pain point enough, it will motivate you to make that change. You have to hit rock bottom. What I realized is that I couldn’t just go to another corporate job because it would be a repeat. I knew that I had to be out on my own, doing my own thing at that point. I didn’t view it as having any other options at that point. My wife and I took out about $240,000 of high-interest credit card debt to start our small company, which was sold to the federal government. We did that out of the basement of our home. I didn’t realize it at the time, but I hit many other pain points along the way in the first few years of getting that off the ground. With the good Lord blessing us, we were able to start turning a profit within a few years. We started building on our dream, which was to accumulate real estate. We bought the building that we operated our company in 2009 and started building a real estate portfolio with commercial and residential property from that 2009 period.

REIS 300 | Buying Non Performing Notes

Buying Non Performing Notes: Sometimes, you find that some notes aren’t worth a dollar.


Didn’t you start out buying and selling notes? It sounds like you started out buying and renting properties. What were you doing when you went into the real estate business?

In 2004, my wife and I hit every workshop there was for real estate investing. We heard it all. You live on the beach after 30 days and retire young and all that stuff. What I realized was that business ownership was a lot of grind. It’s a 100-hour workweek, seven days a week, etc. I realized that freedom wasn’t received through that small business ownership. I thought I would find freedom through buying those commercial properties and residential, which I still self-manage now. I realized that it was more of a long-term annuity play as I’m paying down those properties. It’s not the cashflow that I’m in need of to build towards my aspirations. It’s one of those things, paying off those properties. It will be there as an annuity play later.

That’s what I teach on the other side of the coin. Seller finance these properties, hand it to a note servicing company and you will clear the difference between what you’re collecting and what you’re paying out. You’re not the landlord and you’re not responsible for everything from the back fence to the front mailbox. That’s what you learned. I learned the same lesson too when I had 25 rent houses. That rental thing is a myth. Unless you’re buying these properties free and clear, I don’t see any cashflow from these things. It’s more like a forced savings account where you have to put in $1,500 into the account to fix the air conditioner, whether you like it or not. It’s a forced savings plan for many years or something.

There’s one caveat to that. There are no tax advantages to note investing. Real estate can offset that. That’s the only thing. It is good to have a balanced portfolio.

What kind of rentals do you want? There are different kinds of rentals. You don’t have to be single-family houses or apartment complexes even. You don’t have to deal with families in some rentals. There is no appreciation and no depreciation in notes or note creations. That’s the downside. After you figured out that the rentals weren’t quite everything you’d been told, what next?

There is one thing that I did learn about the rentals that are still with me now because I do buy a few properties a year. I buy commercial industrial spaces where as I look for limited use of the property. That’s what my key is. If you go and buy a single-family home and that family of four is beating that home 24 hours a day, it’s significantly different than if I’m buying block walls and an industrial park. They’re 9 to 5, Monday through Friday. Two of my tenants are churches, so they’re only there on Sunday. That was one of the things that I learned from a maintenance standpoint, is to move to that industrial space.

I decided to owner finance self-storage buildings where they don’t live there. If they need to move along or they can’t pay their bills, it’s just a bunch of trash anyways. If they’re going to quit making their payments, they go in and take everything that’s worth anything before they quit making their payments and leave you with a trash bill. I like what you’re doing. A commercial is a lot different than residential. It has a whole different feel to it. You can also do triple net with these people in a commercial. They pay the insurance, the taxes, the rent and the maintenance. What led you into note buying?

My wife and I sold our company in 2013. From that point, we took back a large business note. That was my first entry into the note-investing field. I’m like, “I’m getting paid this handsome amount of money monthly.” I went to one of the large note trainers to do one of their three-day programs. I got hooked from that point. I said, “This is where it’s at.” It’s heavy in the real estate field, but if you look at the play, the banks are always in the middle of everything, whether it’s private money lending and you’re working a spread or you’re borrowing from the bank to buy a rental property or what have you. The banks are always there. They’re always collecting their check. They’re always well collateralized against the property. I said, “This is it for me.” I started as a full-time note investor in 2013, self-funded and self-taught. When I came out of the gate, I did what most people do and that is buying first mortgage notes. It’s nonperforming notes where the borrower has not made a payment in a few years and it’s secured by a first lien on the property. That was my first entry point into note investing.

You’re not relegated to one state. Are there states that you don’t want to deal in?

I’ll buy in all the states.

Business ownership is a lot of grind. It’s a 100-hour work week, seven days a week. Click To Tweet

It’s anything for a price. Will you buy a note for a dollar?

I’ll buy a note for a dollar. The way to explain this, some notes aren’t worth a dollar.

People always ask me, “What part of town do you buy houses in?” I’m like, “It’s the half-price part of town, whatever side of town that happens to be.” That’s always what scared me about buying notes. Maybe you can help me overcome this limited mindset. It worries me to have my collateral so far away and being in a different state where there are different laws and I don’t know the laws particularly. How do you overcome that mindset?

I came out of the gate buying first mortgage notes because I thought that was less risky. What I found out is with first mortgage notes, a majority of those properties were a fair market value, $70,000 and under properties. A lot of them were junk properties and I was buying across the country. What I was finding is that I was foreclosing and having to take back those properties nine times out of the ten purchases. I was becoming that long-distance landlord that created major headaches where you have ten different properties in ten different states and you’re building ten different teams.

You can’t move the carpet and fix the broken window.

This is where it made the monumental change. That is after the first year when I started buying some junior liens on properties. Junior liens being second, third and so on liens on properties. What I found is I was buying these junior liens on real high-dollar properties. It’s $150,000 up to $1 million and beyond. I was getting a better class of borrower. I was able to work with them and get good loan modifications in place. Once I started seeing that cashflow, that was it.

That’s very interesting because buying a second lien in default sounds risky at first. If the first lien forecloses, it could wipe you out. If you’re going to buy a second lien or a third lien, the question is, “Do you have the money or the resource to take over the liens ahead of you and capitalize?” That could be some huge margins. There might be a second lien on a $1 million house where the first lien is $200,000 and you’re only picking up $50,000 in the second. If you have the wherewithal to clear up the $100,000 in the first lien position in case it defaults, you stand to make a lot more money than your return on a $50,000 note. There’s always this little lottery ticket out here that, if they default on the first, you could go make the first right with an extra $200,000 and end up with a $1 million house with $250,000 invested. It’s $50,000 for the second. You had to clear up the first to get them out of the way because they were threatening to foreclose. You paid them off. Now you’re in the driver’s seat at $250,000 out of pocket expense on a $1 million house. Am I looking at that right?

It’s not so much. I want to go speak more towards the loan modification angle because it’s very seldom I’m foreclosing. To answer your question from a technical standpoint, when you go and file a foreclosure in a junior lien position and, most likely, if you’re in a judicial state, you’re going to file a deficiency lien judgment. You’re going to set an amount, “This is what’s owed to me.” If you go and take that through the foreclosure sale process and you clear that first out, then upon resale of that property, you’ll get what your deficiency lien judgment is amount. Plus, if you paid off that first, the rest of the proceeds would go to the borrowers and most to the states.

I forgot about that.

That’s okay. Here’s the thing though. When you foreclose in the junior lien position, in almost every state, it’s subject to the first. You don’t have to pay off that first unless you’re reselling that property. What a lot of note investors do is rent out the property. If the spread is there, they’ll pay the first, maintain the property and work the spread between the cost of the rental and what’s coming in from a cashflow perspective. If you do have that equity, like on that scenario, $200,000 owed on the first, $50,000 on the second and it’s $1 million at fair market value. You go and get a deficiency lien for all your collection fees, legal fees plus what’s owed on the principal balance, as well as past due interest arrears and late fees. You resell the property for that game.

REIS 300 | Buying Non Performing Notes

Buying Non Performing Notes: Nobody wants the economy to tank, but there’s more of these notes and inventory out on the street when the market takes a dive.


In my example, I was saying that if the first was in default and they were foreclosing, they have to notify the second, the third and fourth liens. They have to notify them and give them a chance to clear it up. That’s what I was thinking. I was trying to point out that if you operate under a certain amount of rules, it doesn’t matter what happens. You’re going to be okay. 

My whole livelihood is based on what I’m doing with note investing and building a portfolio of loan modifications.

Tell us about one of your success stories. Give us a case study.

It was a note that was purchased from a top ten bank. The UPB, which is the Unpaid Principal Balance, is $212,000. We purchased a note for about $0.20 and worked it out with the borrower where they’re starting to make payments on the $212,000. I have a note for $212,000 over a 40-year period.

How much did you pay for?

It’s about $0.20 on the dollar.

Is that $40,000?

Yeah. You would be hard pressed to get that because you have to be positioned well within the note space. I’m not a Debbie Downer on it, but if you started note investing and you went and bought from a retail setting, you’re not going to hit those price points. When you start positioning yourselves and you have the reputation and the identity within the space, you can get carved into some advantageous deals.

I appreciate that transparency and the audience should too. He’s not telling you that you do this overnight. You have a workshop coming up. It’s July 26th through the 27th of 2019. It’s called the Note Investing Fundamentals Workshop. What is one of these workshops like? What can you expect when you go there for two days?

It’s the opposite of what I experienced in the larger training school format that I went to initially. Being a note investor full-time and living off of the portfolio I’ve created, I put the workshop together based on what I think that investors need to be successful. One of the heavy underlining emphasis within the whole workshop is to help transition people that are coming in to think more like a business owner. They’re building a business model for themselves is going to work for them based on their strengths and weaknesses, aside from the mechanics, the how-to and all that. What I find is that’s one of the most critical elements. For a lot of people, it’s hard to transition, especially if they’re working a W2 job and they come into this. It’s very difficult to have success in the note investing space based on all the nuances, taking it as a hobby or a side investment. It requires a lot of immersion. I focus on four phases in the workshop. The first phase is about sourcing, how to source off-the-street deal flow. It’s easy to come into note investing. There are retail exchanges online you can go to and buy notes if you wanted to, but you’re not going to get the types of deals that I’m seeing or other people within my space are seeing.

When you start positioning yourself, your reputation, and your identity within the space, you can get carved into some advantageous deals. Click To Tweet

In the second phase, we focused on due diligence. I have a three-round due diligence process. In the first round, I focused on the property. I look over all the property details and use RealtyTrac. I look up any liens on the property, ownership, back taxes and things like that. In the second round, I deal with the borrower and their ability to pay. At the end of the day, all that matters to me is the borrower and their ability to pay. That’s a mind shift from a lot of folks in the real estate field where you’re a real estate rehabber or investor and you want to climb a tree with your binoculars, look at the roof and see if the roof shingles are on tight. You want to go knock on the wall to see if there’s mold. You like that stuff. For me, I like to see, “Does this borrower have a good character? Are they back on their feet and able to pay me on a monthly basis?” That’s what I care about.

You can find a way to make their payment a little bit less so they can afford it. It’s because you bought it at such a discount, you can manipulate the interest rate or recast the loan with a different set of long years. Do something to help them out. My general impulse is if they couldn’t pay or honor their word to that bank, why would they honor their word to you? 

I talk to borrowers all the time. They had some circumstance that went on in their life a few years ago. It’s usually one of three things. One is love. They got a divorce, some type of relationship change situation. Another is health. They lost their health or someone in their family lost their health. The last one is a job. They lost their job and they’re unemployed.

That’s the same thing I want to know. I’m selling people houses with owner financing who don’t have great credit. We’re going the same direction. I want to know, “What happened? Is it over? Are you back on your feet?” Bad things can happen to great people. It can happen tomorrow and cause us an issue. I’m giving them a loan where the credit bureau is not forgiving them for that faux pas. You and I are going back not to be a machine that has little portals to fill. We’re rational people that can understand the situation and decide if we’re being told the truth or not.

The whole thing is the win-win scenario. That’s why I fell in love with loan modifications and junior lien note buys. When I was buying first mortgages, I was taking back the property. The last thing in the world that I want to do is displace a family. Who wants to do that? What I found is I can go and help people restructure their debt. I bought the note at a discount. I can offer discounts, extend their loan term and lower their interest rate. I can look at their financial situation and structure something that’s going to work within their budget. They’re going to be happy from a cash-on-cash perspective. I’m going to be happy. I own the note and I don’t have to answer to investors. I don’t have to do any of that. Everyone wins at the end of the day.

It sounds like an incredible business and a great strategy. Is this probably a bigger business in the downturn?

It is. Nobody wants the economy to tank, but there’s more of these notes and inventory out on the street when the market takes a dive. I’m still buying. You don’t have to buy these in nonperforming states. You can go and buy notes that are performing too or reperforming as they call it. In other words, the borrower is already back on track. They’ve made a year’s payment. It’s seasoned and you can go out and buy those for a yield. I’ve bought notes anywhere from 14% to 20% yield. I have them in my IRA and my wife’s IRA. We’re building from that point. It’s a great industry. I don’t have to go touch real estate, work with contractors, rehab a prop or find mold behind the drywall. The list goes on and on.

That’s one of the things I like about what you’re saying. You’re helping people not lose their home.

My mission statement is helping people stay in their homes with payments they can afford while making a profit for myself.

REIS 300 | Buying Non Performing Notes

Real Estate Note Investing Mentorship

You’re even helping the banks because the banks don’t want the house back either. It seems like they always lose money when they take houses back so they don’t want it back. I was with Texas100.org up in Austin at the state capitol. They’re trying to pass a law down here that was saying you couldn’t rap a subject to mortgage if it has a due on sale clause. We’re up there lobbying to tell them what they’re not understanding. One of the things I found very interesting was they had the banking commission there. Everyone thought the banking commission was going to be against investors because we do things like subject tos and we don’t notify them and all that.

When got in negotiations with the banking commission, we said, “Do you want us to give you a notice? Do you want us to put in here that you get notified when a sub-to mortgage transaction happens?” They said, “No.” They don’t want to be notified. They didn’t say why but I know why. I think it’s that if you notified them, they would have to make a decision right then that they’re going to foreclose or not. They don’t particularly want to foreclose. They just want the right to. If you tell them and they don’t foreclose, maybe it could be construed as acceptance.

They didn’t want to be notified. All the senators and House of Representatives sitting up there on the committee that we’re testifying and giving a chance to ask questions about our industry all thought that we were doing the bank wrong. The bank commissioner said, “Don’t penalize these guys. They’re saving us from tons of foreclosures.” I couldn’t help but laugh because I knew that. I looked at all the eighteen people on the panel and I went like, “I was trying to tell you.” They wouldn’t believe me until the banking commission guy said that.

Many of my colleagues feel like we’re the ones that are cleaning up the mess of the large banks.

We’re the ones that clean it up. The private investors are the ones that fix all of it.

On the defaulted note side, you have bundles and tranches they will put together or sold to hedge funds. All these funds are selling off to each other in paper.

They were fractionalizing the title of the deed. It was not worth it to any one person to go fix the thing because nobody owned all of the note. The way you do it, you have complete control of 100%. The way I do it, I have 100%. If something goes wrong and it’s worth it to me, I’d go fix it. I try to help them. If I can’t, I try to get another person in. Regardless, I’m paying my private lenders a bill no matter what happens. They don’t even know. I just handle my business but it’s great stuff. I see a lot of character in you by some of the things I’m reading in your bio.

In your workshop, you promise them that there’s no upsale, which is a great relief to people that go to these workshops these days. A lot of times, we go to these workshops and it was just a hook to get in there and tell you a little bit about the business. It’s enough to open your eyes a little bit, but they don’t tell you anything about how to do it. There’s not any real coaching. They dangle this, “Learn how to do it for $25,000.” Hats off to you for having that workshop. It sounds like you’re going to teach the people that come there about how to buy notes.

I give them all the forms and agreements that I use. I give them my whole business model from front to back. I mentor only a few people in a very hands-on way. I’m sold out of mentorships this 2019. I only mentor a couple of people because I’m an actual note investor. I’m not a professional talker or a professional salesperson.

That’s the same way I am. Maybe I’ll take fifteen people one-on-one. I’m going to answer the phone and apply myself to 100% of my ability to whatever your situation is. I can’t do that for thousands of people, hundreds of people or even 25 people. I can’t do it because I have my own businesses. I’ve got my own family. I like going to my ranch. I’ve got a life. I’ve got to live too. I can’t take on 1,000 people. It’s an injustice that some of the coaching programs out there will either overload themselves so they’re no good to anyone or, usually, they sub you out to some student that made their first fifteen notes and who’s not an expert. They sub you out to a novice. That’s not what you paid the big bucks for. Hats off to you for the way that you’re handling this and the way you’re teaching it. I’ve agreed with the same thing.

I’ve been chastised by the gurus saying, “You can’t scale this model.” I said, “I make good enough. I’m not looking to fuel it.” I’m looking for two things. The money is part of the situation. When I didn’t charge money, I didn’t get the other thing that I needed. The other thing I needed was an emotional high in knowing that I helped change someone’s life. I have enough money. Money is not my issue. Give me the check, but what I’m looking for is the win for the person I’m coaching. I love it when they ring the bell or they drive to my house from six hours away to shake my hand and get back in their car and go back to say, “I told my boss I don’t need his services. You’re the first person I got in my car I want to talk to. Thank you.” That happened a few months ago. He started crying and then I started crying. It was all worth it.

Many people gravitate towards what their strengths are and move away from their weaknesses. Click To Tweet

In everything I’ve done for the past years, I saw a bigger reason than what I originally started out for. In the beginning, we’re trying to find a way to make a living and get financially independent so people don’t tell us what to wear, when to get up, how long we can go on vacation or if we can go to our kid’s basketball game out of town. These people are running your life. When I look for people when I coach, there’s this meter that starts registering the minute I start talking to people that want to come on board as a coaching student. I’m looking to see how far that meter gets pegged over. If it’s pegged way down in the red, it’s not everything I’m looking for but it’s one of the major things I’m looking for. You’re going to agree with me on this too. It’s because you can’t take a lot of people, if you say yes to them, it’s because you believe you can help them. Why would you say yes to someone just for the money and you couldn’t get the other side of the formula, which is the emotional high and the satisfaction of changing a life?

One thing I’m going to add to that is I look for how financially solvent someone is. How can you go and attempt to be the bank, to be financially secure in advance? If you’re bad with money now, you’re going to be even worse when more money comes in.

Other people’s lives will be in your hands at that point.

I’m looking for people that do have some competency and self-control and have hit that pain point that they’re willing to advance. With the people that I mentor, they double as a buyers group with myself. I put in my own money. They put in their money. We couple money and go after larger takedowns. That’s how the business model is. I can’t have Joe Schmoe. If Joe is broken, he doesn’t make the decisions and is not going to listen to anything, what good would that do bringing him into my group?

It sounds like some sales employee but is not. I interviewed my people before I decide to take them for about an hour. It’s a lot of stuff. It’s not an interrogation, although it goes into some pretty personal stuff because you’ve got to know. If I’m going to help you, I need to know, “Where are you at? How long are your legs? How short are your legs? What does your bank account look like? What does your savings account look like? What do you get going for you? What do you get going against you? Is your wife on board or is she not onboard? Do you have handicapped kids?” It applies because handicapped kids demand a lot of time. We’re not going to neglect them. There are a lot of things I ask. You sound like the same exact guy. What I did was I had the online thing and the one-on-one. Many people couldn’t reach the one-on-one level. I made a Tuesday night group coaching call that was way more affordable and more people could get in and test the waters. The price that you sometimes pay for one-on-one mentoring is no price to test the waters. That’s a price when you know you’re going into something and you need a pro standing next to you.

This is why I do the two-day workshop. This is a time where I get to know people. I get calls from REIAs around the country. They’re like, “Come speak and present.” I can’t go there and do a Wednesday night, satellite on Saturday and then work people into my funnel. I have four children, six and under. My wife stays at home and homeschools them. I coach on two of their little league teams. I’m not looking to go do a roadshow around the country.

My wife has Parkinson’s so I had to change my lifestyle. I had to stay. I used to like to travel around and talk to people because I like people and I like talking to them. At the moment, I have to do things from my house and my town because I can’t leave for even one night. 

That has forced you to be better though, to move your model around and be better with where you’re at.

I was going to say that to people. For once in your life, not making a lot of money can be an asset if you can find one of these strategies in real estate that work for you. You won’t have to be that successful to replace your job. At that point, you get back 2,600 hours a year to work on yourself instead of work for someone else. For those who are reading who don’t make a lot of money, I had two greatest gifts. I didn’t go to college, which is probably why I didn’t make a lot of money. No one wanted to pay me money because I didn’t have that piece of paper.

That was the greatest thing that ever happened to me because I was forced at some point to say, “If I can’t make $30,000 a year out in the street by myself, I’m going to go jump off a cliff.” I learned how to make $30,000 a year and then $50,000 a year and then $100,000 a year. Every time you improve your business by $50,000 or $100,000, you’re the 100% recipient of it. If you want to increase that company that you worked for when you were in the phone room, if you didn’t figure out how to increase their sales $100,000 a year, how much of it would they give you? It’s zero. For 30 years, they’ll give you a gold watch. 

REIS 300 | Buying Non Performing Notes

Buying Non Performing Notes: How people’s personalities and situations are made up is going to determine how they source and vet deals and how they work with borrowers to get them back on their feet.


You have to do for yourself in this economy, but none of this is easy. In 2017, I wrote a book called Note Investing Made Easier. It went through the roof in terms of sales. It’s still up there as one of the top books. I’ve since written two additional books. What I found is that I took so much satisfaction in helping borrowers create loan modifications that they can afford within their budget. I wrote a book to help other people. People are coming to me, letting me know all their stories and situations. I never was exposed that way. I’m an introvert by trade. You probably get this because you have such a large audience. You used to have people that want more. They know that where they’re headed is not good. They see the writing on the wall. Someone was in his upper 60’s and they’re like, “I have $20,000. Can I give it to you?” They asked me if they could give it to me to invest. I said, “I don’t do that.” What’s sad is someone else is going to take that money.

I will take their money and I’ll repay them back. Send them to me please because it requires that money. I have 44 people who have about $15 million invested with me. Many of them have been with me for years. I know exactly how to take care of people’s money. It’s almost like a public service because when they don’t give their money to me, I find out later that 50% of them lost their money within a few years. They don’t have any of it left. Usually, it wasn’t because they bought stuff for themselves. They do things, like loan it to uncle Harry in Alaska because he is starting a snow cone factory in Alaska. They don’t know it yet but that money is long gone.

It’s the shiny objects too. There’s so much white noise in the whole real estate industry. It’s unreal.

Go to 1000houses.com/noteworkshop and learn about the workshop on July 26th through the 27th of 2019. Is there anything you can give to our readers to get them acquainted with you?

I can give them my REO calculator, the spreadsheet that I use when I’m calculating cash-on-cash for my deals.

Go to the website and get a free copy of your REO calculator. See what that spreadsheet looks like when you’re trying to size up, whether or not to buy a note or what offer you need to make. Writing a book changed my life. It sounds like it did yours too. I had no idea that so many people were going to gravitate to it. There is a world of people out there hurting. They’re not satisfied with what they’re doing in their life and they don’t know what to do. There are lots of ideas out there and not every idea is for every person.

It takes a certain person that can handle rehabbing, landlording and note investing. They’re all different personality traits.

It takes a certain person to do childcare. It takes a certain person to do lawn maintenance and gardening. It takes a certain person to build a deck. People said, “How did you get into real estate?” I like to tell them, “I failed at everything else. It was the last thing left.” One of the reasons it took me so long to recover on every one of those businesses was because I never left with a bad name and I never left owing anybody by the end of it. I always paid everyone back, whatever it was. I’d go a year or year-and-a-half and fail. It’d take me another year to pay everybody back. It was a long time in between businesses because I always put my head down and paid everybody back and kept my good name, which paid off in the end.

The keyword to what you’re saying is businesses. You set it up and ran it as a business. That right there, in and of itself, is as hard as learning the day-to-day operation of what to do to get something from an unpaid state to a paid state. That’s what I find in the note investing space. There are so many nuances. I’m buying in every state. When you buy notes as a note investor and I’m buying from banks, I’m buying across the country. You have to know different things in different parts of the country and judicial states, nonjudicial, what types of vendors to use, how to pull a credit report, how to pull skip tracing, background checks and all that. That’s what I try to do. I simplify that for folks so they can walk away and have some clarity in terms of how they need to proceed. Most people, when they come into real estate investing or note investing, proceed with trial and error. They just throw things out.

That’s how you and I did it. Did it hurt?

If you’re not happy, start taking some action. Start getting educated and find out where you belong. Click To Tweet

Yeah. You take all the pain of the learning curve. What I’m trying to do is help reduce that learning curve for people that want to come into the note space.

Where is your workshop going to be held?

It’s in Washington, DC, about fifteen minutes from Reagan National Airport. People can fly in and shuttle or Uber over to the hotel. It’s for two days. It’s a small group setting. I don’t do large venues. I’d rather have a small group to make it a hands-on workshop. It’s very customized. We learn what everyone’s aspirations are. How people’s personalities and situations are made up is going to determine how they source deals, how they vet those deals and how they work with borrowers to get borrowers back on their feet. We go into all those areas during the workshop.

There’s a lot of minutia to any business. You’re going to take down some of the minutiae and weed out some of the things. You’ve got me wanting to go to this thing. I got my hands full but you sound like a guy that if I went there, I’d get my money’s worth. You’re going to talk right to me and give me the real meat on the bone and it’s not to get an upsale, which I love. I appreciate you. We’re talking about notes here. I would be remiss if I didn’t mention that we have a sponsor for this show. It’s MoatNoteServicing.com. If you got notes and would rather put that collection in the hands of someone else, go visit that website. Talk to them. See what they say. They’re very reasonable and very professional. They bought a $20,000 servicing software and spent thousands of dollars to train their people on it. There’s not a thing this software doesn’t do. It even has portals where people can get in and see their accounts in real time. You don’t have to make phone calls to find out if a payment was made or not.

Don’t self-service notes. You need to get set up with a servicing company.

Do you set up with a servicing company too?

I always do. What’s your time worth? They send out monthly statements. They send the year-end tax filings. They keep you in compliance.

I do all that. Plus, they send all the late letters and late fees. They’ll take it right up to foreclosure and hand it off to your lawyer for you.

What’s your time worth? Your time should be spent on sourcing and vetting deal flow.

Let’s talk about that. One of the easiest things to outsource is bookkeeping and collections, whether you’re a landlord or no matter what business. Outsource those things because the money’s made making the deal. In Martin’s case, it’s buying a note. In my case, it’s buying a house at that right price. You can see exactly where every business starts. My businesses start with a house. His businesses start with a note. Why are you doing anything else besides that? If you don’t have a lot of notes, the price for collections is not very much. It’s the same thing with bookkeeping. You don’t have a lot to keep track of. It’s a small bill. Let that grow as you grow. Your bill only gets bigger as you get bigger. It should be able to handle it. The problem with most businesses is there are too many hats to wear. If you wear them all, you will maybe make a lot of money but won’t have any time to enjoy it. You may give yourself a heart attack. 

What I find is that many people gravitate towards what their strengths are and move away from their weaknesses. Instead of developing a weakness, which may be sourcing, picking up the phone and calling someone, they fill up on what they’re strong at. That’s the admin, keeping busy work. The more they do the busy work, the more that they don’t have to focus on. If you neglect what you may have a weakness in, it’s going to cost you in terms of business. What I always recommend is people should bring on partners. That may be a point where you have a strategic partner that can shore up and offset some of what your weaknesses are.

Please don’t get a partner that’s like you. You don’t need that. You need someone that has everything that you don’t have. If you’re a great deal finder, go find a guy that has money and that’s not a great finder. If you get together, each of you is going to triple. It won’t be doubled but it’d be tripled.

Is there another Mitch out there?

Mike Powell is my partner. I keep things funded and keep the infrastructure of the office running the way it’s supposed to. He handles the acquisitions sales team and all that part of the business. It’s a perfect fit. It works out well. I’ve done 2,000 plus houses in my career over the past years. If you do the math, it’s a house every four or five days. If I never see another house again, I don’t care. I haven’t seen the last 300 houses I bought and the last 300 people who bought my houses. After a few years in the business, I’ve figured out how to make that a business. What I did was I paid $30,000 to go sit in a mastermind or a think tank with similar people in exactly the same business who had already done it. I let them tell me how they did it. I remained open. I let them unwind me and rewind me a different way. It wasn’t fun and easy by any stretch of the imagination.

One of the things I had to give myself permission to do was not to buy 100 houses that year. If I’m going to work on my business, trying to get it to where it can run without me, I’m not going to be out there buying houses. I’m working on the internal things of it. “Who’s going to fill this chair? What does this person look like? What are they going to do? How do I tell them what to do?” I spent a year doing that. I only bought 30 houses instead of 100. The first four times I tried to become a real business, I tried by myself. The biggest mistake I made was I didn’t give myself permission to not buy 100 houses that year. I was trying to buy 100 houses and set up a business. You couldn’t do it. It was too labor and too time intensive. I went to that mastermind and that’s what they told me. He says, “You’re going to have to give yourself permission to not have a stellar year this year.”

It’s the power of good education and surrounding yourself with the right people. Good for you.

It was very painful. I was going to quit if it wasn’t for that because I was exhausted. I’ll do anything besides lose 100% of the income. Maybe I’ll lose half the income. I’ll pay people. They taught me how to make more income and I didn’t show up. It’s a whole other topic. Is there anything else you want to say to the people out there?

I appreciate our time. I respect you as a person and all that you’ve accomplished. It means a lot that we’ve spent this time together.

What this show is about is trying to help people find their niche. If what I have to offer helps you, come on board and we’ll try to get you educated. If it’s what Martin has to offer, go over there and do what he does. I don’t care what you do but take control. Get that life that you’re destined to have or that you should have and become who you’re supposed to be. Quit going through the motions every day to a job you hate. If you hate your job, quit it. I’m not saying to quit tomorrow but make a plan and get moving on something different. Do you have a podcast, Martin?

I have the largest Facebook group in note investing called Note Investing Made Easier. I do a podcast within the group in a private setting.

I appreciate you being on. Good luck in July and always. You sound like a cool guy.

I appreciate you.

I want to thank each and every one of you for stopping by to get you some Martin Saenz. Visit that workshop. If you’re not happy, start taking some action. Start getting educated. Find out where you belong. There’s a place for everybody on this planet. I’ll talk to you soon.

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About Martin Saenz

REIS 300 | Buying Non Performing NotesIn 2004 he was fired from a corporate job he hated and, along with his wife Ruth, founded a government contracting company in the basement of their home.

Over the next ten years, as they were building a multi-million dollar federal contracting company, Martin and Ruth began using their profits to purchase residential and commercial rental properties in the Washington, DC area.

In 2013, Martin invested in a live, two-day workshop on note investing and immediately began applying what he learned to his own investment portfolio. From 2013 until now, Martin remains a full-time note investor that lives on the cash flow he has built through note investing and real estate.

On May 1, 2017, Martin’s first book, Note Investing Made Easier, debuted at #1 on Amazon. Since that time he has been traveling the country sharing his method of profitably turning non-performing notes into 30-year income streams.

Martin Saenz holds a Master of Business Administration from Drexel University and a Master of Science in Project Management for George Washington University.