The Fastest Way To Build A Six Or Even… Seven Figure Real Estate EMPIRE!
We’re all looking for ways to broaden our investments in a down market. We’d all like to keep profits trending upward despite a pending recession, so what are the options if adding new properties or more fix-and-flips opportunities are harder to find?
Allow me to introduce you to the Founder of Labrador Lending, Jamie Bateman. Jamie became an active real estate investor in 2010 and specializes in buying and selling mortgage notes.
In fact, he created a portfolio of forever passive income by acquiring over 75 mortgage notes with an excess balance of $5 million across 20 states. He’s also the host of the From Adversity to Abundance Podcast, and I had an absolute blast being on his show a little while ago.
In our conversation, Jamie walks us through how he broke into this unique field, creates structures to share his profits (and risks) with passive investors, and what makes his strategy so different and allows him to scale and de-risk his portfolio.
If you’re curious about mortgage note investing, this episode is for you. And if you’d like to learn more from Jamie, simply head over to LabradorLending.com/ebook to get a free copy of his e-book, The Power of Mortgage Note Investing!
Key Takeaways with Jaime Bateman
- What a mortgage note is and how to invest in them for yield.
- Why investing in defaulted notes for value-add yield is a lot like doing a fix-and-flip.
- How Jamie finds mortgage notes.
- What makes investing in mortgage notes different from multifamily syndications.
- How Jamie uses partial and hypothecated notes to scale and de-risk his investments.
Jaime Bateman Tweetables
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Connect with Josh Cantwell
Sign Up For The Forever Passive Income Partnering, Mastermind and Coaching Program with Josh Cantwell
Josh Cantwell: So, hey there, welcome back to Accelerated Investor. I’m your host Josh and I’m excited to be with you today. Today, we’re going to talk about mortgage note investing. My guest is the founder of Labrador lending. His name is Jamie Bateman. Jamie has been an active real estate investor since 2010.
Over the last five years since he really started to focus on buying and selling mortgage notes, he’s acquired over 75 mortgage notes with an excess balance of over $5 million across over 20 states. That creates forever passive income for him. He has a lot of hands-on experience overseeing construction projects.
And so, we’re going to talk today about, number one, how to invest in performing mortgage notes for yield. Obviously, everybody’s struggling to find yield today because of this pending recession, stock market’s down. So, let’s find ways to invest for yield. That’s number one. Number two, how to invest in defaulted notes for value-add yield, which Jamie actually compares to doing a fix and flip property. He talks and kind of compares investing in defaulted notes to fix and flips. Number three, where to find these notes? Number four, what’s the difference between a mortgage note fund and a multifamily syndication?
We’re also going to talk a little bit more about what’s called partial notes and hypothecating notes. That is a way for an active note investor to share the ownership and the profit with a passive investor. We’re going to talk about all of those things today on Accelerated Investor with myself and Jamie Bateman, the CEO and founder of Labrador Lending. Here we go.
Josh Cantwell: So, Jamie, hey, listen, welcome to Accelerated Investor. Thanks for jumping on the show. We’re going to talk today about different types of investment strategies. Listen, I know most of you guys are dying for yield. You’re dying for ways to make money. Stock markets got you down, Tesla stocks got you down. Carvana stock is down 95%.
And one of my objectives is to bring investment strategies to my audience of different ways. You can make money both actively and passively. That’s why I invited Jamie Bateman on the show. Jamie is from Labrador Lending. And we’re going to talk about different ways to invest in notes. Jamie, thanks for jumping on the show today.
Jamie Bateman: Yeah, absolutely. I really appreciate it, Josh. I had you on my show, From Adversity to Abundance, and I know this isn’t a plug for my show, but it was one of my favorite episodes. Your story is fantastic. So, that’s why we reached out to you, and I’m really happy to connect. So, thanks for having me.
Josh Cantwell: Yeah, Happy New Year, man. So, Jamie, let’s talk about the specialty of investing in notes. So, tell everybody, tell us, what does that mean? What does it mean to invest in notes, both mortgage notes, defaulted notes, active notes? Explain the strategy from a high level for us.
Jamie Bateman: Perfect. So, yeah, I had a background in residential real estate investing, just like a lot of people can relate to as far as buying a rental property, rehabbing it, that kind of thing, and discovered notes in 2017, 2018. So, it’s really been my focus since then.
So, what does it mean exactly? It means you’re buying the debt. You’re essentially becoming the bank. We focus on first-lien mortgage notes. That’s what we buy. We buy both performing and nonperforming. And I’m happy to go down any of the rabbit trails you want to with regard to this stuff.
So, what it really means at a high level is you’re buying the debt, you’re becoming the bank, in a sense becoming the lender. Even though our company name is Labrador Lending, we don’t actually lend money out. We buy the debt. We put ourselves in the shoes of the lender. So, real quickly, at a very high level, buying a performing note is similar to buying a single-family rental property. And so, you’re buying that for cash flow and yield. You’re not buying that for a value-add play like you might be accustomed to in the multifamily space and that kind of thing.
So, a performing note, which means the borrower is making their payments, is akin to a rental property for cash flow. So, we buy those, kind of run the business, keep the lights on kind of thing. Secondly, the nonperforming note is more like a fix-and-flip property. I’m sure your audience is familiar with what a fix and flip is, a rehab, and you buy a property that’s distressed and sell that property once you’ve added value to it, hopefully.
Well, the nonperforming note is very similar to a fix-and-flip property. You’re buying a distressed note, you’re buying that debt, and then you’re adding value to it and you’re exiting one way or another. And there are many different exit strategies and many things we can talk about there. But that’s kind of how I like to give the high-level overview of mortgage note investing.
Josh Cantwell: So, the money-making strategy, the way to make money with this from just a pure yield perspective to secure these types of notes that are already performing. And let’s say, for example, it’s a $150,000 note on a performing asset and possibly buying that note for the existing yield on the paper or buying the note. But buying the note for yield, the existing yield, or also buying that no potentially at a discount to increase. Is that right? Explain that to us.
Jamie Bateman: That’s right. That’s absolutely right. And almost, I have seen notes purchased at par, meaning not at a discount. We don’t do that. We’re always purchasing at a discount. So, at a very basic level, purchasing at a discount is, like you said, let’s say the principal balance on the loan is $150,000 and it’s a performing note. Let’s say it has an 8%, what they call coupon rate that’s on the note itself, the actual note document. We’ll buy that. And I’m just making things up right now. But hypothetically, we’ll buy that at, say, for $125,000. And so, that yield to us actually becomes greater than that 8% coupon rate because we’re buying the note at a discount. And there are many reasons why the seller might sell at a discount, but notes almost always sell at some type of discount.
So, if you’re buying a performing note for yield, like we’re talking about, it’s more of a safe play. And so, you’re buying for yield, you’re buying for cash flow, but one of the advantages of note investing is the collateral, right? So, as opposed to buying some other type or investing in other asset classes that might produce a yield, this has the collateral, which is the real estate itself. But short version, yes, we’re absolutely buying at a discount when we purchase notes and that kind of protects us because we’re not overpaying it on the front end.
Josh Cantwell: Sure. And then on a discounted basis for the notes that are defaulted where you talked about the comparison value-add like kind of fix and flip or even a value-add apartment complex, you find that probably and even more significant discount because it’s not performing, the borrower is not paying, but then you’re essentially trying to rehab the note, if you will, get it back to performing, or there’s lots of other things it might do to it. So, what might be the discount, kind of range of discounts that someone might get if the note was originally $150,000, it was performing at one time? Now, it’s no longer performing, maybe for a year, let’s say, or six months, it’s no longer performing. How does that look as far as a discount that you would expect to get? What do you think would be a good deal if it’s something you were buying?
Jamie Bateman: Absolutely. Of course, it depends. And people don’t like to hear it depends because it doesn’t sell well. And there are many factors here, caveats out of the way. A discounted note, first position note, the purchase price has definitely gone up in the last few years and across the marketplace in general, which I think we’ve all seen across real estate in general, deals are harder to come by.
To answer your question more directly, you can probably purchase a nonperforming first-lien mortgage. You can expect to pay anywhere from, say, 50% to 75% of the principal balance. And you get into other factors as well. The payoff may be significantly higher than the principal balance, but for high-level nonperforming notes, you can expect to pay maybe 50% to 70%, 75% of the unpaid principal balance, whereas a performing note might be more than the 85% to 100%, somewhere in that range. So, that gives you a ballpark answer, at least.
Josh Cantwell: I was just doing the calculation here on the side. So, you take the performing note, let’s say it’s $150,000 at 8% if you were to then buy that performing note at $125,000 which is about a 20% discount, give or take.
Jamie Bateman: Yeah. If it’s a really strong performer, that’d be a great price if it’s 8%, but yes and I threw that number out.
Josh Cantwell: Yeah. And I was trying to give my audience the idea of the yield, right? So, then the yield goes on by that coupon, which is producing an 8% return off $150,000. You buy it for 125. Now, the return goes up to 9.6%. That’s by the state backed by the collateral. Think of that investment versus a corporate bond or versus a government bond or fixed annuity or fixed life insurance. Those types of similar-style investments that are pretty much set it and forget it. The discount worth 150 that you might be trying to buy now for 50% or 75% of the value, then we have to do the work of the…
Jamie Bateman: This work. You got it.
Josh Cantwell: Workouts the forbearance, the lost…
Jamie Bateman: There’s a lot more work.
Josh Cantwell: And to get that note back performing or even foreclosed, now you’re looking at an exit strategy loan payoff, what’s the real estate worth in order that if you have to rehab it or you have to take it back and rehab it, what’s the upside potential of that note.
Jamie Bateman: Absolutely.
Josh Cantwell: Great stuff. So, Jamie, how would someone– let’s talk about somebody who’s an active investor like me, and you actively buy-and-bill, buying properties, buying notes versus somebody who maybe just wants to stroke a check and wants to just get a yield. Explain the strategy one versus the other and how does somebody get involved in finding notes to even get started doing this.
Jamie Bateman: Absolutely. And that’s one realization I had when we kind of was prompted by redoing our website a couple of years ago. This really does break down to active and passive investors. And that’s not just true for notes only, but I think most people do end up determining that they want one or the other. I am both. I am a passive note investor as well. I will personally invest in other note investor’s mortgage note funds.
But if you decide you want to be more of an active note investor, can it be considered passive compared to other types of active investing? Sure. It’s not a physically demanding thing, whatsoever. It can be done from anywhere, and absolutely, from a computer and a telephone. I mean, that’s really all you need to be an active note investor.
But once you start to scale and I know we’re going to get into that a little bit, there’s work. And so, it becomes more active, right? And so, to get into this space, what I recommend is hook up with someone who knows what they’re doing. Obviously, get a coach, get a mentor, and learn from someone who’s done this before, just like any other type of asset class. You’re not on your own. Within the note space, there are a lot of people who are very willing to share information. And frankly, there are a few people you need to look out for.
So, it is somewhat of an unregulated space. And so, we kind of protect our own. So, what I recommend is link up with someone who knows what they’re doing – coaching, training, education. There are a lot of good programs out there. We personally do mentorship ourselves, so that’s what we offer for the active note investor. And then we also have things for the passive investor as well.
Josh Cantwell: How about inactive note? Let’s say I wanted to just start buying notes actively and I was looking to, maybe I had some of my own capital, I have a group of investors that have capital, but somebody has got to be the face of it, enjoy the fund and work. Where are some good places to go to start looking for pools of notes or notes that are for sale?
Jamie Bateman: So, it’s an extremely inefficient marketplace, just like real estate can be, right? So, there’s some work involved and…
Josh Cantwell: That’s where it yields at, sort of spreads that.
Jamie Bateman: 100%. That’s where the opportunity is. It’s a relationship business, just like I’m sure your listener is very familiar with. In the commercial real estate and residential real estate side, it’s a relationship business. There are platforms such as Paperstac.com, NotesDirect.com, preREO. There are some, I think, NoteXChange.com, different platforms where you can go and purchase notes. The problem comes in and that you don’t know who you’re dealing with. You don’t always know who the seller is. And that’s very important in this space. You’re doing due diligence on the person that you’re transacting with or working with just as important as doing due diligence on the note itself.
So, I have a list of note sources, but we’re constantly refining that list and working that list and reaching out to people. It’s been probably the biggest struggle in the space, quite frankly, in the last few years is deal flow. There’s plenty of still capital out there, frankly, trying to find a home, trying to find yield, but deal flow has been the biggest challenge. And then the third piece of running the business is the operations piece, which we can talk about.
So, it’s hard to give a direct answer. It takes work. It’s a relationship business, but we’ve developed relationships in the space. And once you’ve developed those relationships and you will close, note sellers and note brokers will come back to you and say, “Hey, I’ve got this tape, this list of notes. I know you closed last time. I know you do what you say you’re going to do. Here’s another opportunity.” And we are frankly starting to see an uptick, especially in the nonperforming space, which I think is going to continue in the next couple of years at least.
Josh Cantwell: Yeah. So, if you are now a passive investor and let’s say you got $100,000, $500,000, a million bucks laying around in cash or self-directed IRA and you’re thinking, hey, man, there’s just not a lot of yield in the traditional market right now, the stock, bond, mutual fund market. It’s just doing the traditional stuff. And I’m really realizing, wow, that’s a very emotional marketplace. Stocks, bonds, mutual funds go up and down because of emotion, not necessarily because of performance, right?
All of a sudden, Federal Reserve raises the interest rates. Now, Tesla stock is down 70%. That’s not because the fundamentals of Tesla changed. Matter of fact, Tesla did more deliveries in 2022 than in any previous year ever. They’re getting subsidiary or whatever I want to say, free money from the government to build these electric vehicles, right? So, why would a stock like that go down 70% purely on emotion? Why do tech stocks that were just fueling it during the COVID era, why would that be done? Why would Amazon be done all purely based off of emotion?
And so, if you realize that that market is built off of emotion, you want to kind of get away from that, investing things that just make numerical logical sense. Multifamily note investing, now you get back to that space and you say, “Okay, I’ve got this money. I don’t trust the market.” Jamie, what can you say or where can you point our audience to, to just stroke a check? Where can they go to learn how to invest passively?
Jamie Bateman: Absolutely. And we have a blog post that covers so much of this. If your audience wants to drill down into this topic of active versus passive, we have a very detailed blog post that goes through that. It’s really a spectrum. And so, it really is. There’s a lot of in-between. There’s a lot of gray.
There are many ways to be a passive note investor. One is to do partials or hypothecation where you’re essentially lending money or buying a set of payments on a whole note. So, in other words, I’d paint the picture for you. I might buy the whole note myself as an active note investor. And I might say, “Hey, Josh, I know you have 50 grand you’re trying to put to work as a passive investor. You can send me the 50 grand. And of course, there are contracts and everything like that. It’s not just a back-of-the-napkin kind of thing, but I will send you or the bar of payments for the next three years will go to you. I will still actively manage this note out because I still have an interest in how the note does. So, buying partials is a little more passive than being in active note investor partials or hypothecation. Your audience can google those terms.
Another way to do it is to be more of a joint venture. Now, I know I’m sure your audience is familiar with joint ventures with real estate. The same rules apply there with how we test and all that stuff. We can skip over that. So, both joint venture partners technically need to be somewhat active, but there may be more of a day-to-day operational. I may still be the operational partner in the joint venture, and then you might be the money partner just using the same two people for the scenario here. So, joint venture is another way to be a little more passive as a note investor.
Thirdly, and this is the final one, really is the most passive way is to invest in a mortgage note fund. Many note funds are out there. Some have a three-year hold. They all have different structures. We have our income fund, which is called the Integrity Income Fund. That is, we aim to pay monthly distributions and we have only a 12-month lockup.
So, a mortgage note fund is really the most passive where you can go. It’s similar to a multifamily syndication, but a couple of key differences are, typically, the fund itself will own anywhere from maybe 10 to 50 notes within the fund, so you’re spreading your risk across many different assets as opposed to your typical multifamily syndication, which is often, correct me if I’m wrong, Josh, by one project, right? So, it could go really well in five to seven years on your exit. And it probably has more potential for upside, frankly. But with a mortgage note fund, you’re spreading your risk across to many states, many borrowers, many assets. And so, it’s just a different play. It depends on what you’re looking for.
Josh Cantwell: Yeah. And that mortgage note fund, I’m sure there are different structures, Jamie, so help us understand. Are those typically like you have one that focuses where its main strategy is to invest in performing notes versus maybe a different fund is specifically set up to invest in defaulted notes? Sometimes, maybe you have one fund that kind of does both, and people can write different checks for each where they might think, hey, I don’t want to be too risky. Maybe I want to write most of my checks, 75%, 80% of my money, I want to put that in a performing note fund, and then 20%, 25%, 30% of my money, I want to put into a defaulted note fund where there might be some more risk, get some more work, but there might be some home runs in there. Tell us about that.
Jamie Bateman: You got it. It’s exactly right. And we have both. We are not currently raising capital for our nonperforming note fund, but I can speak to both just from a personal standpoint of managing both funds. Our nonperforming note fund has a three-year hold, and the real reason for that, meaning you’re committing to putting your money into the fund for three years. The reason for that really is we try to exit most of these notes that are non-performing within 18 months. It could be six months, it could be three years, frankly. But we try to turn that money twice, and so, we try to exit within 18 months and put that money back to working and get all your capital back in three years.
Our performing note fund, which is currently available for investment is exactly what you said, we’re targeting, we’re at purchase. We’re targeting more of a 12% to 15% yield to bring into the fund. Now, these notes do have some type of issue typically, maybe reperforming. There may be some paperwork, we need to clean up something. We know there’s a little bit they can’t scratch and dent. There may be some type of issue with it.
But generally, it’s performing, a fairly strong pay history in the last 12 to 18 months. We’ll buy that at 12% to 15%. And our performing note fund pays out an 8% yield. It aims to do that. So, we don’t get as much of a management fee. The management fee is smaller there because there’s not as much work for us from an asset management standpoint. Exactly, I mean, you nailed it.
So, we do have some performing notes and our nonperforming note fund because we want to make sure we have that cash flow to keep the fund running, of course, and plenty of reserves in each, but they’re absolutely different plays. And we have investors who invest in both, like you said, or we have investors who say, hey, I’m not interested in this monthly yield because I don’t need the cash flow each month hitting my IRA. I want to wait till you open up your next nonperforming fund because I want that upside. So, it’s just a different goal for different people depending on your circumstances.
Josh Cantwell: For different folks. Yeah, I love it. Jamie, so we talked about how investors could get started. How did you get started? How did you get going with this both? What about your intro and note investing? Was it a pivot from residential, and maybe there was just a defaulted note versus a defaulted deal? Tell us about how you got started and how you found out about it.
Jamie Bateman: Yeah. So, years ago, I was working at a title company and mortgage lender, I should say, mortgage broker, to be specific. So, I did have experience there. My father was a real estate agent, kind of grew up in the residential space. And so, my wife and I have been active residential, single-family rental real estate investors since 2010.
And so, that was after doing several rehabs and essentially the BRRRR method and keeping those properties for our own portfolio. You can call it boredom or shiny object syndrome or whatever, but it’s like, okay, we bought six or seven townhomes, which were almost identical. All right, I got this. All right, now what kind of thing? So, I did get a little bit, all right, what else is there wanting to add to my own tool belt?
I used to think of getting into notes as more on the front end, but I actually think of it more now as kind of just a cycle. And so, now, to answer your question, 2017, 2018 has just started looking into different strategies within the residential space. I was looking at tax lien investing, I was looking at mortgage note investing. And there’s a thread on BiggerPockets that talks about both.
I just started researching and reaching out to people, wanted a different strategy to invest in different asset class and I wanted to be able to do something from my home, to be honest with you. So, I got into notes, started out with a joint venture with someone who’s now a business partner of mine, which is a fun story, and then I scaled. So, yeah, several different reasons why I got into notes. I probably started off a little too passively, quite frankly. But we can talk about that later.
Josh Cantwell: Sure. Tell us about how you scaled it. Like how do you go from just learning about it to building up a fund and having many millions of dollars worth of notes and passive investors? And how does that look? And how did you scale? What did you learn along the way? What worked and what didn’t when you started scaling?
Jamie Bateman: Yeah, I mean, it’s a fascinating topic and I think, for me, and I think for most people, frankly, you learn by doing and watching others. I mean, why reinvent the wheel if it’s working for other people? I’ve figured out that I don’t need to reinvent the wheel, I don’t need to be the next Tesla.
And so, are we tweaking things, or are we always kind of trying to get better? Of course, right, and we’re never satisfied or complacent. But I started using my own capital, which I do recommend others do as well. You will see people getting trained in mortgage note investing to go immediately seek out lenders and they’ve never actually– in other words, lending partners to go buy a note and they’ve never actually purchased a note. I don’t recommend that. I do not recommend taking on other people’s money if you don’t know what you’re doing.
So, I started to use my own capital to buy performing notes just to kind of get a transaction done. Okay, now, I’ve purchased a note. Now I know how to board that note with the loan servicer, for example. So, over the next several years, I just kept scaling, and ways I did that were joint ventures. So, I would be the active partner because no matter what, at some point, you do need to take on other people’s money. I don’t care who you are. If you want to scale, you’re going to run out of your own capital or at least the capital that you’re willing to put toward this project.
And so, I started doing joint ventures, and then I started selling partials to use other people’s money to put that to work for those more passive investors. So, as a quick example, I’d buy a note myself with my own capital for, say, $50,000, and I might sell a partial for a set yield, which might be, say, 8% to the more passive investor. They might pay me $20,000 for that stream of income and I can take that $20,000, maybe another $20,000 from another partial, and go buy another whole note for my own business. That’s another way to scale.
So, I did joint ventures. I sold probably, I don’t know, 20, 25 individual partial deals at the time. And from a bookkeeping standpoint, it was quite a bit to take on. So, we’ve since then determined that the fund model just makes a lot more sense. And so, that’s why we’ve moved into a really fund-only direction is, I still have my own portfolio, but I’m mostly focused on our two no funds.
Josh Cantwell: Yeah, I love it. So, our experience comes from a different angle but very similar. When I was flipping tons of properties coming out of the Great Recession and buying foreclosures was easy, I mean, they were all over Fannie Mae websites, the Freddie Mac websites, the MLS, HUD homes, all of that stuff. And then we got to the point where we’re like, okay, we don’t want to do any more rehabs right now. Like we had 15 to 20 going on at any one time. That was a lot. But we’re really skilled at raising money.
So, we decided to throw all that money into a fund, and then we actually started a private lending company where we would actually make private lender loans, and then the fund would actually basically table fund the loan where we would make the loan to an investor, we would lend the money out at 65% to 70% of its after repaired stabilized value, both on residential and commercial. And the fund would then sequentially table fund the deal. Our lending company would get a point or half a point or a point and a half or whatever.
So, it made the fee for making the loan, and then all the rest of the yield went back into the fund. And the fund then had an operation partnership structure between us as the fund manager and servicer. We’d service our own loans, and then all of our limited partners, right? And they would get an 8% preferred return plus 50%. It was a 50/50 split thereafter. They’d get 8%, we’d get 2%, so 8% to the passive investor, we got 2% for our management fee, and then 50/50 thereafter.
So, if there were anything over 10%, we would split 5050. And we loved that business. So, we actually ran that business all the way up until the time that COVID hit. And when COVID hit, we were kind of pregnant two ways. We were very involved in multi-family apartments and we owned 2,500 units and we also ran this private lending and fund structure.
As you remember, Jamie, I didn’t forget Friday the 13th, March 13th, COVID basically swarmed to the US and the NBA shut down, Major League Baseball shut down, all this stuff shut down. We essentially stopped lending and essentially stopped putting deals in the fund because we weren’t lending anymore. And then we never reopened. We just decided eventually let it wind down and close. So, I’m just curious, because you’ve been doing this since 2018, how did COVID impact your note investing business?
Jamie Bateman: Yeah. And I remember you saying on my show that you decided to focus on what you’re very good at, which was raising capital. And I think that’s a key piece of advice. But COVID really didn’t have a major impact on us, frankly, other than to say we were able to kind of focus on– there was a period of maybe two to four months where there was essentially a standstill between buyers and sellers. The transactions were down, the expectations were very different between buyers and sellers. So, we were still buying in that period, but it was slower.
But overall, looking back over the last few years, since 2020, I don’t think COVID had a major impact because we are not on the very front end like you were with lending. We’re buying notes that may have originated five, ten years ago, maybe two years ago. So, it really didn’t have a major impact on us. It gave us more time, on a personal level, to kind of focus on fine-tuning our operations and making sure we’re hiring the right people. And there’s always room for improvement within any business, right? So, I found it actually to be a good period to focus on my business and kind of tighten things up a little bit. Deal flow has been slow, but I don’t think that was from COVID.
Josh Cantwell: Yeah. So, we had a bunch of notes that we sold off out of that fund. We ended up having buyers, attorneys, different banks, other private investors. We didn’t sell off a lot of loans, but we had 175, 180 in that fund at one time, it was about $40 million of value, and we sold some off. So, if someone like you or your members, your students, would you guys be a buyer of some of those types of loans that we might have had back in the day? Is that one of the sources that you guys would be…
Jamie Bateman: Absolutely. That’s a very good point, if you want to pay attention to note funds or funds like yours where, yeah, when the fund closes, that fund needs to liquidate. They need to send their money back to their investors. So, it’s absolutely a buying opportunity. So, 100% looking– one of the main sources of deals for us is a bigger note fund, right? And so, it trickles down. I’m not buying from Bank of America directly. So, absolutely, yes, that’s a great source of deals for sure.
Josh Cantwell: Got it. I love it. Now, Jamie, I know you guys share a lot of advice on your blog, LabradorLending.com. You can go to the blog. I’m actually looking at it here on my other screen. There are lots of great articles – How to Use Infinite Banking to Fund Your Note Business, How to Passively Invest in Notes, Five Tools to Help Note Investors, How to Hypothecate versus Note Partials. There are lots of different kinds of advice that you share on your website, in your blog.
If you could take maybe one or two of all the articles you’ve written, pieces of advice that you pass along to your members and your students, what are some of those things that you could share with us today? What’s some advice that you would give along that you think that you’ve learned along your overall real estate journey, and also specifically in your note investing journey?
Jamie Bateman: Yeah, I think the two things that jump out to me are, one is we did a blog post a while back that was real estate versus notes. And when I say real estate, I really mean residential rental property investing, and then versus residential mortgage note investing. What are the key differences? Everything has pros and cons. So, there’s one article that speaks specifically to that, and we kind of did it in a fun way where it’s a boxing match and notes win one round, and then rental properties win the next round. And so, you’ll have to check out the blog post to see who wins.
The second blog article that comes to mind is the passive versus acting the spectrum of passive and active note investing. And really, what it boils down to is that active investors can work with passive investors in many different capacities like we already talked about. But you need to kind of know yourself and your own goals. I have people that reach out to me and say, should I do notes? Should I do short-term rentals? Should I– I don’t know. I don’t even know you.
Josh Cantwell: Good point.
Jamie Bateman: Like I don’t know. How would I know? It depends. I don’t know what your situation is. We need to kind of– and that’s why I actually prefer to do mentorship one-on-one still because I really kind of want to understand the situation first. But the third thing I’ll just throw out there is we have an e-book where we– and I know e-books are everywhere and they’re free and they’re easy to discount. Ours is 74 pages. It compiles really all of the blog posts that we wrote, and it very much walks you through all of this stuff.
So, I would recommend your listener, if they really just want to know, in fact, I started– before I’ll mentor someone, they need to read the e-book first and have some questions from it and just to know that they’re serious. And maybe notes are not for them, that’s fine, right? But our e-book is chock full of information.
Josh Cantwell: Yeah, that’s it. I’m seeing it here on my other screen, again, LabradorLending.com/ebook. The e-book is called The Power of Mortgage Note Investing. Obviously, Jamie is the author, 74 pages, that sounds like it’s really…
Jamie Bateman: It probably should have been five or six e-books. We just threw it together in one deal and sent it out. It’s free. So, try to offer some value upfront.
Josh Cantwell: Yeah, absolutely. So, for my audience, go ahead and download that LabradorLending.com/ebook. Throw in your first name, last name, and email. Get your copy for free. Check that out. Jamie, any other places that you would recommend for our audience to engage with you or anything else to check out about your investing?
Jamie Bateman: I appreciate that. Very quickly, if you need a loan servicer, BIFILS.com, it’s BIFI Loan Servicing, it’s By Investors, For Investors. We have a loan servicing company that’s a different arm of what we have going on here.
I also have a podcast that, Josh, you were on, which was one of the best episodes we’ve had. It’s called From Adversity to Abundance, and I would recommend, I encourage your listener base to check that out. It’s a little less in the weeds on investing and it’s a more human-focused podcast, but it’s somewhat of a passion project for me. I really enjoy doing it. And so, those are LabradorLending.com, BIFILS.com, and From Adversity to Abundance podcast, those are the three places I would point your listeners to.
Josh Cantwell: Fantastic stuff, Jamie. Listen, to all my audience, go engage in those three resources. And Jamie, thanks so much for joining us today on Accelerated Investor.
Jamie Bateman: Never the last. Thanks a lot, Josh. I really appreciate the time.
Josh Cantwell: Well, listen, guys, I hope you really enjoyed that episode with Jamie from Labrador Lending. I appreciate all of you guys engaging in the show. I am always so grateful, thankful, honored, honestly, that so many thousands and thousands and thousands of people listen to this show and all of the ratings and hundreds and hundreds of reviews that we’ve gotten. If you feel compelled and you enjoyed this show, please leave us a five-star rating. Open up your phone. Open up Spotify or iTunes or iHeartRadio, wherever you’re listening to your podcasts, listen to that. Hit the subscribe button. And of course, leave us a five-star rating.
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