Somebody to Lien On.
Scott interviews note investor and mastermind member, Laura Blunk, about some of the mind blocks that affected her early on and how she overcame them to close on thirty plus deals in the past year. She is the portfolio manager for Silver Hammer Investments, a Texas-based, family-owned real estate investment firm specializing in buying distressed debt. Laura discusses assets, closing notes, making offers, and her goals in the business. Providing great insights on what you need to do and expect when making deals, she highlights the lessons she learned along the way and how to be more authentic with investors.
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My energy is always excited to host the show when we have guests on. I’m extremely excited to share this guest on this episode. This person has done a tremendous job over the last twelve months and was the winner of the Most Improved Note Investor of the Year award at our Note Mastermind in August. Let’s give a big warm welcome to our friend and our note family member, Laura Blunk. How are you doing?
I’m doing great.
I’ve got some people on here excited to hear about your story and some of the great things you’re doing. Laura, for those that don’t know you out there beyond our warm note family and Note Mastermind, I want you to share a bit of who you are and your background in real estate.
Let’s see, I run a small company called Silver Hammer Investments. We were a wholesale and fix and flip company for nine and a half years in Austin, Texas. The market was getting very thin in Austin, it was getting harder and harder to find good deals, and then I ran into Scott Carson. It was like coming home. It was the place to be and it’s so much easier and so much nicer. My dad was in real estate. He was a property developer on the East Coast, outside Washington, DC. He and his partner bought land all over Maryland and Virginia and this was pre-computer days, so my job from about age fourteen was to go out to the mailbox and collect the checks, bring them in, register the payments and send out the receipts. I kept the figures in this big leather accounting book every month. So I guess I’ve been in real estate since dinosaurs roamed the Earth. When Scott started talking about notes, I was like, “I know this. I’ve done this.” It seemed like a natural next step for our business. And that’s where we landed.
We got connected through a fellow investor, Cody Sperber. He had me come on and do a Zoom training with a group of is wholesale Mastermind students, who were curious about doing notes. You were part of that Zoom meeting. Then you and Julian came to the Fast Track and then to the Mastermind and then you bought a couple of notes.
We bought two notes right away. Those are about to wrap up. We went through a foreclosure auction on one and we got it back. Now, it’s on the market. We still have to go through the auction for the other one.
You used your own funds to take those down?
Yes, we did everything you told us not to do. We immediately took some money out of our savings and bought two Notes with our own money. That was one mindset I had to get over. I couldn’t get past “How do you go out and asked for somebody else’s money to invest if you haven’t done it yourself?” I wanted to go through the process myself. After that, we were kind of lost and we froze up. I wasn’t sure how to deal with management, servicing and I didn’t know the process. We froze for a little while, but then you were nice enough to hit me upside the head. That seems to have worked. I asked for help and you were great.
You went through what people go through. They get excited about it. You said, “We’re going to fund it with our own funds and then we’re going to refinance our money out with other people’s money.” I remember it in the Fast Track. I was like, “Let’s get you marketing.” You’re doing stuff online. You’re well-connected here. You’re going to Meetup groups and you’re going to networking events here locally. You had a little bit of a mind block. You had to push through that.
MIND BLOCKS: DON’T CHASE THE WEIRD ASSET. IT IS A JUNK.
I can put stuff out online. I had some guy called me and said he liked my branding. I didn’t realize I’d gotten far enough to be branded yet. I guess it’s working. There was a bit of a mind block that we had to push through, but seeing how it’s done and watching everybody else work through and listening to you say, “Just do it.” I thought, “All right, fine, we will just do it.” I’m one of those people that will jump off the cliff and assume the parachute will show up on the way down. So we did, and you were right.
I remember you gave me a phone call and you’re like, “Scott, I’m ready to rock and roll. I’m wanting to put some things in place.” You came by the office. We spent a little time working on an asset. What did I tell you to go do on that tape?
You said, “Just make offers.” We spent more than a little time. I thought we’d spend 30 to 45 minutes. I was there for two and a half hours. You were great.
The thing is like, “Here’s a list of assets that you should have been getting and reached out to. Here’s the list of assets from an asset manager. Let’s pull up a bunch of stuff and let’s dive into it.” The whole philosophy of, “Let’s make a bulk offering. They’re not all going to get accepted and let’s see what falls through.”
That was a key. The first two we bought, we made four or five offers and we got two accepted but the tape you gave me, it was huge! You said “Offer on everything. Everything that looks decent and the numbers work, offer on it.” That has made the difference. That’s what we’ve been doing. Julian is the numbers guy. I’m the, “Oh, That’s so cute” kneejerk reaction. He’s the one that says, “No, that one doesn’t work.” Now I say “Run the numbers on this tape and decide which ones should we make offers on.” So, that’s what we do.
You were a little nervous when I said, “Make an offer on these twenty assets,” and you’re like, “What? How are we going to fund these?”
I was petrified, “Twenty assets? What if half of them get accepted?” That was the mindset of how do you write a contract on something before you have the money to buy it? It was a real hurdle for me, but we’ve managed to break through that.
Since you came by the office, how many notes have you bought so far?
We’ve had two. We have eighteen in-house. We have ten bids accepted that we’re closing on this month.
You’ve gone from two to twenty to almost 30. Has it gotten a lot more fun?
It has. We’ve gotten seven tapes in this week. A lot of them will have one asset on them or are junk, but some tapes are worth looking at. And we get the weird cross-collateralized things too.
What Laura is talking about is I’ve gotten phone calls from my students saying, “I got this weird asset.” I’m like, “Don’t chase the weird asset. It is a junk. Don’t waste your time. Move on. Stick to your mean potatoes deals.” You said you’re getting tapes. Is this coming from your marketing out to asset managers on a regular basis?
It is. I did two things that I saw changed our business. One was I downloaded my connections off of LinkedIn and started emailing them and two, you said something about, “If you post something every day for 90 days, your business will change.” I posted something every day for three weeks and then I went to three times a week. When I walk in a room now someone says, “I know you.” Some guy called and said, “You do a good job at branding.” I also started attending a lot more REIAs. We’re going to the San Antonio Investor Expo.
It’s good stuff and it has the consistency in your marketing. Let’s talk about that because I’m sure some people are like, “What are you posting?” I can’t think of stuff on a daily basis to talk about.
I couldn’t either. I’m still thinking, “What the heck am I going to post?” Once in a while, I’ll fall back on that national calendar, It’s National Vanilla Ice Cream Day or something. What I posted the other day, “It’s the equinox.” Sometimes I post an asset. Sometimes I post articles off of DS News. You have to poke around a little bit. I was driving up to Dallas for the Mastermind and I kept seeing billboards that I liked with a slogan I could adapt. I told Julian, “Write that down. We can use that.” Once you start thinking about posting things three or four times a week, then you start seeing stuff everywhere. When you focus on marketing, all of a sudden you start seeing marketing ideas everywhere.
The thing is, I will simply regurgitate a lot of the things that I’ve seen from my mentors and stuff like that. I had a short conversation with a couple of my mentors via Facebook and talk about marketing and things that I really respect from them. The things that I respect the most from them is consistency. They’re not always doing it themselves. They set up some RSS feeds or they’ve got an assistant or two that’s helping up with stuff. It’s not always them having to come up with the idea. You mentioned a couple great things that I want to reiterate is the day of the year. What day it is? It’s National Vanilla Day or Talk Like a Pirate Day. I saw that was a favorite amongst people. The thing is doing it consistently. You’re getting the word out, you’re taking a little bit of time. You’ve started to enjoy it, I believe, too. We worked through a deal or two on one of our Virtual Note Buying Workshops. You’ve also started incorporating some Animoto stuff in your videos too?
MIND BLOCKS: WHEN YOU START FOCUSING ON MARKETING, ALL OF A SUDDEN YOU START THINKING ABOUT MARKETING IDEAS.
I like Animoto. I’m still working out the bugs on how to work that but I like it. You can show assets. I’m learning.
Let’s come back to your assets. What’s your bread and butter when you’re purchasing assets? What are you looking for? What areas are you liking? What are your goals that way?
We’re pretty standard. First position residential under $200,000 over about $30,000. We do CFDs as well as notes. We really like Ohio, Indiana, Southern Illinois and Michigan. Those have been our best area so far. Franco Barile has been very nice. He answered lots of questions for me. That helps if you have somebody who is in the area.
You’ve got a chance to meet him at the Mastermind too besides just talking to him on the phone.
I did. He’s very nice.
You’re buying some stuff, who’s your servicer you are using?
We’re using Madison Management and FCI.
Are you using anybody else for initial borrower reach out or are you just relying on Madison to do the borrower reach out? What’s been your success in the right party contact aspect?
We’ve been relying on Madison and they’re really busy. I’m thinking that maybe I’ll take some pressure off of them and have Singer Law Group or Sottile and Barile do right party contact and the negotiating. Particularly now that four of these that we have had accepted are going to be foreclosures. It looks like that’s what’s going to happen. I’d like to work as quickly as possible and if we can be doing work around that.
You said you’ve gone on to more networking events that people have recognized you. Were you friends with these people on Facebook beforehand or a part of different groups? How has that worked out?
We are either part of a group or have been friends with them on Facebook. I’m 59 years old, so it’s weird for me to walk into a room and have people say, “I know you.” But It works. You get your face and your logo out there and people pay attention.
This is a big question for you and you may not know this off the bat. I should have prepped you for this, but you’ve been emailing out to asset managers. How often are you doing that?
Every two weeks.
Do you know what your average open rates are?
I have two lists. I have one asset managers from Facebook, which gets a lower open rate. We have about 10% to 15% on that one. The ones that I target directly to the asset managers in our preferred area, Ohio, Illinois, Michigan & Indiana we’re getting about 22% open rate. We send out on Tuesday morning and on Thursday. The total is about 24%.
20% plus open rates. That’s good.
We haven’t gotten many tapes from them yet but they’re opening. They’re looking and they know who I am. I’ve started calling the ones who open the emails.
You said you’ve got some tapes coming from your emails out to asset managers. That had been the bigger list instead of smaller lists. You’ve been doing it consistently since April or May? How’s that?
We’ve been doing this with asset managers for months. That’s the emails they have gotten from me.
You’re raising capital and a lot of people are using their self-directed IRAs to fund stuff?
So far, there are self-directed IRAs. One guy used the 401(k) and one guy’s wire wasn’t from any fund.
The mind block is gone.
Yes, pretty much. If the investor is getting the return they want, I don’t have a problem with that.
It’s gotten a lot easier for you now that you’ve actually started taking action and doing some of the things that we teach. Correct?
Absolutely. I was thinking because of Note Night in America, we reworked our elevator speech and I’m starting to go to more REIAs. They ask “Are you a flipper?” So I have to explain “No, we’re in notes. We raise private money for real estate projects.”
You’ve got a couple of case studies of work there. Do you want to talk about some of those numbers there for you? Let’s share the first one and we’ll go from there. Laura, let’s talk about the first asset you’ve got.
MIND BLOCKS: DON’T CONSIDER IT AS JUST LOSING MONEY WHEN YOU LEARNED A LOT FROM IT.
That would be in Anna, Illinois. We just went through the foreclosure auction and we got it back and it’s now on the market. That one, we are probably going to lose a little money. We paid too much for it. This was a learning experience and I knew that was going to happen. I went into it with my eyes open. We’re not going to lose a lot. We’ll probably sell it for what we paid for it. Our losses in management fees and having somebody come cut the grass and clean up the house.
This was one of the first ones that you took down?
It was one of the original ones that we took down with our own money. We did get a partial investor on that one, but he will be taken care of. He will get his return and his ROI on that. That’s covered. It was a bit of a learning curve for us. We did everything you told us not to do.
Let’s be honest with everybody here and let’s make this a learning aspect of things. A lot of people use their own funds to buy assets and that was a mind block. You weren’t making a lot of offers because you didn’t have any other extra capital. Most of your capital was on these two assets. We discussed it, “Why don’t you offer up to arbitrage?
Bring on an investor to help refinance a chunk of your money out and offer them a flat return.” That’s what you did, correct?
You’re going to lose a little bit on your part on that for servicing costs and carrying costs along the way, but the investor is going to make a good return. There’s going to be $0.50 of the investment or something like that. They were in for a chunk of the investment, not the full amount.
About a third. They’ll get their investment back plus the interest rate. They’re covered. We’ll lose a little bit of money, but I don’t really consider it losing money because we learned a lot on this. We learned about servicing, we learned about the process, about right party contact, about the legal aspects of the foreclosure, we went through a collateral. So, I don’t consider that a loss.
You learned a ton because it was your asset. It’s different than coming in and looking at the collateral file here in the office with me or looking at something online. You get your hands dirty and figured this out. Let’s talk about the second deal that you wanted to share.
We’ve had some fun in the last month. We bought one in Dayton, Ohio that’s nice. It’s in the historical district. If I lived up there, I would be drooling all over that house myself. It was good we don’t live there. We offered her deed in lieu. We said, “If you could just sign this, we’ll all be good. You don’t have this on your credit.” She said, “I agreed to do a deed in lieu with the last servicer and they never sent me anything.” How does that happen? We sent her a deed in lieu and she signed it. We’re all good. It’s going on the market. It’s a nice little two-story in Dayton, Ohio. I got a letter from the Historical Society saying they wanted me to know that any external changes needed to be submitted in writing and approved by them. Ha!
Let’s talk about the numbers on that one. What’s the value of that property?
The value of the property for our sale purpose is $30,000.
What did they owe on the property? Do you remember?
They owed $38,000 or $39,000.
Do you want to share what you paid for it?
We paid $7,000.
It was occupied at the time. Had she made any payments on the payment streams when you were looking at buying it?
She hadn’t made any payments on the payment stream, but she was still living there. She knew she couldn’t afford it and they were in the process of moving out. They had offered her a deed in lieu and she said, “Send it over and I’ll sign it.” There was a bit of a short delay in that we had to find her now because she wasn’t living there anymore. Then we had to get the house closed up. We winterized it but we didn’t really have to because it was the summer. When we finally got hold of her, she said, “Yes. Send the paperwork.” We sent that over and it’s signed and I’ve got a realtor over there. She put a lockbox on it and we’re going to put it up for sale. It’s going to be a good return.
When did you purchase note?
This was the one that we purchased in April.
You’re into it for about six months then and sell it at $30,000 and you paid $7,000 and legal for $2,000 with Madison. That’s good. That will be a nice 200% return on your deal there. Did you have your own funds on that one or you have a JV partner?
I have a JV partner on that one.
On the notes that you’re buying, have you talked with any of the borrowers and stuff like that? Trying to get him re-performing on the fourteen that you bought?
We have a couple that are re-performing. We had one, we negotiated and she started repaying and then I got a call from the fire department that said, “There’s police and fire at your house.” I went, “What? I’m just the bank.” I can’t get a report from the police or the fire department. I have to submit it in writing. I submitted it and it’s still on the way. We do have force-placed insurance on everything. I don’t think she had renter’s insurance on this one because it was a CFD, but we’re covered. We’re trying to get in touch with her. We’d been missing her. Madison called and left a message and she called back and left a message. To see how bad the damage is and if she wants to stay. She had already started re-performing. She’d already made two payments and then this happened. I called the fire department right away and I said, “I’m just the bank. I got a call from a neighborhood watch. Can you tell me what’s going on?” She says, “I really don’t have a lot of information.” I said, “Can you tell me if it’s a total loss or if there were any people in the house?” She looked up and she said, “No. There was no EMS, so there were no people in the house and it isn’t a total loss.” That’s all I know until I get the reports back.
That’s a shame because she already made two payments on time.
That’s sad but we don’t know about that one.
What are your goals?
50 notes by the end of the year, not including any that we’ve passed on to other people.
Not really because you wholesaled some.
I haven’t wholesaled any I referred a tape. It was a large tape and we didn’t have the purse strings.
That’s in the process.
That’s pennies over here. We want the fifty that we do.
That’s the thing that people don’t realize is you can go from zero to 50 relatively quick.
You can. I’m surprised at how far along we are.
I knew you were capable of it. Did Julian have a mind block release as well?
MIND BLOCKS: THE THING THAT PEOPLE DON’T REALIZE IS YOU CAN GO FROM 0 TO 50 RELATIVELY QUICK.
I don’t think he ever had a mind block. He was working for George Rodney out of Dallas doing foreclosure appraisals and evaluations and taking pictures. Following through foreclosures for about three years. He had a real good idea of the value of a property and how to evaluate the neighborhood. When this came along, it just seemed logical to him. He’s a real numbers guy. He likes the spreadsheet and he can go through a tape in twenty minutes.
I don’t want people thinking that that’s all the due diligence that you do. You do some upfront due diligence. Identifying assets, you make some offers and then when they counter back, that’s when you do a deep dive.
We do a little bit of our own and then we’ve been starting to use Dickie Baldwin to do our initial stuff. He’s got more in-depth stuff that he could do for us, so that’s good too. NoteProz, we’ve done that too.
Just putting the tools at work.
Mostly, we do initial and then we just make offers. If it turns out bad, we can pull it later, “These look good. These don’t,” just offer on all of these.
Once you get to see what’s accepted or what’s still available and stuff l ike that, let’s talk a little more of your deep dive after you get the counters back. We want to walk through what you are doing then.
Once we get the numbers back, we begin our actual CMA. We get somebody out there onsite that will get out of the car and take pictures and look around the neighborhood and look around the house.
Do you mean you’re not going off of Zillow?
No, that’s nice. We’ve had some that we had to pull that out because the pictures came back and it was falling down. We’ve had some that they didn’t look great online, but he went out there and the driver said, “They built a brand-new porch and the house has been painted and there’s a new roof.” It’s nice to see that some people are taking care of it and it’s a surprise and they are worth what you think they are.
That’s a big thing and I’m sure some people who have bought the house, like owner financing and then they’re doing the work, the pride of ownership, to take care of the property, to build it up and stuff like that. We’re driving around in Michigan and Ohio and I’m seeing a tremendous amount of pride of ownership. What advice would you give somebody who is coming from the wholesale and fix and flip side about note investing?
That was another hurdle to get over because coming from wholesaling and coming from fixing and flipping After Repair Value is king. What can I sell it for in the end? With notes, it isn’t about after you fix it up, unless you’re going after foreclosures for that purpose. It was hard for me to get from ARV, to what is it worth now, as it stands. I don’t know why that was a hard transition for me because that’s how you buy it. That’s what you’re going to sell for if you end up taking it back. You can’t sell it for ARV unless you do the work. That was a sticking point with me, but we got past it. When I get valuations back, I even take the lowest estimate when we run our numbers.
You live just South of Austin in Wimberley, Texas?
Austin has been a hot market. What advice would you give to people living on market like Austin, Texas that are having a harder time finding like wholesale deals or fix or flip deals?
MIND BLOCKS: THE MASTERMIND IS GREAT JUST BECAUSE IT’S A GROUP OF PEOPLE THAT THINK LIKE WE DO, THAT ARE TRYING TO DO THE SAME THINGS WE ARE.
That’s why we’ve got out of wholesale and fix and flip. You can spend $500 and take a two-day course and poof, you’re an investor. The prices are way too high, these people are paying too much for these assets. We got out of it because our competition was outbidding us every time. I know they’re not going to make any money on the backend or they’re going to settle for, “We’re going to make $7,000 on this asset after three month’s work.” Really? “What is your time worth?” That’s one of the reasons why we stepped into Notes. If you are in a tough market take a look at Mortgage notes. You aren’t limited by geography. There is a huge amount of inventory. Instead of your direct competition being 1000 other local Wholesalers in town, you are one of 5 or 6000 Note investors Nationwide. And the amount of private money being underutilized is staggering!
That’s good advice out there for it. What are your goals for 2019?
I’ve been thinking about that because it’s coming up fast. I don’t really want to do 100 in a year.
I don’t want to work that hard. If we could do 60 or 70 in that neighborhood, it would be good. If we can keep it at that level, then we’ll both be happy. I understand that it’s pretty easy to scale up and if that’s what you’re looking for, that’s great. That’s not my goal.
There’s nothing wrong with that. Fifty deals, that’s four plus a month, one a week. We’ve discussed that. You know your numbers. You know what you want to hit. You got some monetary numbers and stuff you take advantage of and bring in. We’ve worked through those numbers on that and you’re right on pace to hit those. You’re plodding along. You’ve gone from, “I think I can to I know I can.” The little note buyer that could. Any advice for those that are thinking about coming into the Fast Track or the Note Mastermind that we offer up?
Scott’s training is second to none. He walks the walk. If you’ve already decided to go into notes, it’s a matter of finding a coach that works with your personality. Scott works with our personality. He shoots from the hip. He doesn’t suffer fools easily, and he doesn’t tell you what you Want to hear. He tells you what you Need to hear. If you’re going into any industry or you’re making a business change, you have to find a coach. The Fast Track was great for us. I went through it twice. It opened up both of our eyes. The Note CAMP is great. It’s a little overwhelming sometimes, but the fact that you videotape it is really great. You can go back and listen to all the different lectures. The Mastermind is Amazing because it’s a group of people that think as we do, that are trying to do the same things we are and you can throw ideas back and forth or you could throw out a question, five or six people answer it and that’s a tremendous value. I love the Mastermind.
The Mastermind is my favorite part of everything that we do because it’s great to see everybody coming together and friendships being made and people get to know each other. You’ve leveraged the Mastermind to reach out to people in specific areas. I know you’ve reached out to Bill Griesmer on an asset in Columbus. He saved you from buying an asset that was trashed out and vice versa. That’s the beautiful thing about a true Mastermind is people coming together to help each other from different sources. Also being there to lend a hand because we’re all going to be in that position at some point, “Who do you know? Who do you use?” We all love good word of mouth advertising from people that we’d like to use. That actually does a great job and spread the word on what vendors are using and also the vendors and knows what to avoid too.
Find out what other people’s target is and sweet spot for buying. If you’re going to get stuff across your desk that you don’t want to bid on but if you know somebody else, it’s good Karma to pass on. You don’t even have to wholesale and I send it on to someone else because it’s a nice thing to do. Or they can all bid and you take down the tape together.
Laura, what’s the best way for people to get ahold of you?
You can call me at (512) 461-7868 or you can email either Julian or myself at Laura@SilverHammer-US.com and Julian@SilverHammer-US.com.
You’ve overcome your shyness of talking and reaching out and making offers and really kicking butt and it is great to see.
If you have money that you want to get working, I have ten assets to fund.
Are you emailing out to your database and raising capital that way on actual assets that you have marketing or you do a little bit of both?
Twice a month. I don’t want people to be overwhelmed with email but I email to our IRA investors. I email to all of the Austin investor groups that I used to be part of about every two weeks.
Laura, we’re very proud of where you’ve come and where you’re going. We expect big things out of you and the rest of the year and also in 2019.
You’ve been an amazing help with the education. When I have a problem, I can text you and call you and you’ve been great.
Thanks, Laura. I appreciate it. I love having Laura on because she’s gone through some things that a lot of people have gone through with mind blocks or, “I’m going to focus on it and prove the concept before I start going out and advertising my audience and doing some things like that.” She’s gone from zero to 30 deals relatively quickly. Stay tuned and keep an eye out for her. I guarantee you’ll see some big things from her as well. Thank you so much for joining us. Please leave us a five-star review on iTunes. We would appreciate it and I’d love to hear your feedback on the show as always. Go out and make something happen. We’ll see you all at the top.