Today’s REI Classroom Lesson

Scott Carson lets us in on who to ask for when calling a bank about finding non-performing notes. He also shares keywords to mention and what not to say.

REI Classroom Summary

There are special departments that handle non-performing notes and they’re not always called the same thing. Listen to Scott share some tips from his experiences with talking to the banks.

Listen to this REI Classroom Lesson

Real Estate Investing Classroom Show Transcripts:

Mike: Welcome back to the REI Classroom, where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Scott: Hey, everybody. My name is Scott Carson and I am the Note Guy, with And I am today’s host of the REI Classroom. And today’s subject, since I am known as the Note Guy, today’s subject is going to be about where do you find note deals.
Mike: This show was sponsored by
Scott: Where do you go, what department do you call at the bank to find note deals? And many people, many investors, especially note investors, are used to, let’s just say, the low hanging fruit, the hedge funds that offer up assets that you can cherry pick like the FCI Lender Services, the Watermark Exchanges,, some people are familiar with the old Granite Loan Solutions that was around for a while. And a lot of investors are wondering, “Where do I go to find really good deals that’s not picked over, that not every note investor out there has been looking at for a while.
And the best place for you to go for that is to go direct to the banks. Go direct to the source. And there are specific departments in each bank. They’re kind of similar named, but I’m going to give you those department names of what they are and who you need to talk to, who is a decision maker in the bank, who first and foremost can either, A, sell you a deal, sell you a note deal, or, B, put you on their Investor’s list that they send out their list of distressed assets or distressed notes that they’re looking to move either monthly, quarterly, or annually.
Now, these special departments, these asset managers go by a couple of different things. One is always the “special assets department.” Now, you’re never going to call and talk to customer service to have them transfer you to the special assets department. They are going to tell you “Oh, no, we don’t sell notes,” and not forward you on. What you’re going to call, and who you’re going to call, you are going to call not Ghostbusters or Notebusters, you’re going to literally call the corporate office of the bank and ask to speak to the special assets department, the secondary marketing department, or the chief credit risk or chief credit officer desk.
Now, it is very important you be very specific on what you say. Now, you don’t want to call and say, “I’m buying notes and REOs,” because what’s going to happen almost 100% of the time is the message board, the secretary, the administrative assistant who is answering the phones at the corporate office, is going to hear “REO,” and they are going to forward you to the REO Department. That’s not where you want to go. You want to be specific and I say, “I need to speak to somebody in charge of your secondary marketing, your special assets, or your chief credit risk or Chief Credit Officer.”
Now, sometimes you’re going to have to dumb it down depending on how intelligent the person is you’re talking to. And so you may want to say, “I need to speak to the person in charge of your distressed notes, your distressed mortgages.” Sometimes you can even say, “I need to speak to somebody in charge of your commercial loan department.” Because very often, the commercial loan officers or the vice president over commercial loans often knows who handles the loan sales for the banks, for the lending institutions.
Now, what’s great about this is these guys, these gals, they’ve got some really good brains. They are literally looking on a daily, weekly, monthly basis at the bank’s portfolio of what is in default and deciding what they need to move and what they need to sell off.
Now, not every bank is going to sell every month, not every bank is going to sell every quarter. There are literally 27,000+ lending institutions out there. For you to reach out to every one of them would take you several years to do if you’re just calling one at a time. But there are some great things that you can use, tools you can use. There’s a website called, like $150 bucks a year to use, that will help you track down special asset managers. Along with just using good old technology of going to the LinkedIn and typing in “special asset managers,” “secondary marketing managers,” or “chief credit risk.” Often times, if you’re looking for a specific note, let’s say at Bank of the West, type it in, “Bank of the West special assets” will often give you two or three people there that work at that bank who can help on the loan sales.
Now, one big caveat of this, guys and gals, is to be aggressive about this. Realize that these people are extremely busy and won’t often return phone calls, but they often will return emails. So when you’re calling or following up with an email, you’ve got expect to do it multiple times. Unfortunately, what happens, many note investors will send one email out once they get an email and they never follow up. So in hindsight, they probably shouldn’t have made one single phone call anyway because they would have wasted their time.
But if you’re serious about finding really great deals from banks, where it’s clean paper, usually pretty clean properties, and stuff at bargains that the banks really need to move off their books, that’s who you want to talk to. The special assets department, the secondary marketing manager, or the chief credit risk officer. Those three departments or that one department, whatever it is called for, will make you a ton of money because nobody’s doing that. Very, very few, I would say less than 1% of all real estate investors out there understand that, and are reaching out to these asset managers on a daily or monthly basis.
Heck, once you get somebody’s email, it’s really easy to direct market to them with a monthly email and communication. Many times, we get emails or phone calls from asset managers who’ve been getting our emails once a month for six, 12, 18 months, and they finally said, “Oh, we’re now in a position to sell.” Or, “We now have something to sell where we had something to sell, and your email, your branding, your name came to mind.” So definitely guys, this is something that you do, long-term play. It is not a quick flip deal, it’s going to be want to something that you build relationships with and do it over and over and over again. And trust me, if you do it for the long term, you’ll make a ton of money doing it.
So, that’s my lesson for the day. Guys, we’ll see you guys at the next one, and have a great day. Happy investing, and we’ll see you guys at the top.
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