The Chasing Financial Freedom Podcast is a weekly show that helps you take back control of your financial future. In this episode, we continue with Part 3 of my journey of struggling with failure. I am struggling with paying off my 6-figure debt load and learning how to balance my day job and side hustle. Also, as I improved at taking care of myself, life started changing for the better. My outlook on how I would turn my side hustle into a business became clearer, but my biggest takeaway is my health if I do not make it a top priority can not do anything else as I only get one shot at life.
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Hey guys, Ryan DeMent. I hope you guys are having a great day Chasing Financial Freedom this week is episode three of my journey of entrepreneurship and dealing with failure. So last week, guys, we talked about it. I had challenges working on my side hustle for almost four years. And then. Being able to come.
Up with a routine that would work for me at night after working 12 to 14 hours daily. If you missed that episode, I'd link it in the show notes. Otherwise, let's get to this week's episode. This week. I want to talk about how I took this side hustle that I started with buying non-performing notes. And it morphed into social media posting.
It morphed into sharing my passion and my vision with others. And then it morphed into learning. About other aspects of real estate to where we come across. Hundreds of rental units in the Midwest that we could potentially buy two. I've got to hurry up and make a decision during these almost four years.
Of when I'm going to leave corporate America. And actually. Move on to become an entrepreneur. And I can tell you this just straight up. I was nervous as heck. And the reason why is that I failed twice before that. And I was out of money; I'm still paying off during this time. I'm trying to figure out better ways to generate money for myself.
I'm making a good living. But I need to garner more money so I can accelerate my pay, paying off my debt quicker.
And also get me into a savings mode. I put in emergency savings. Excuse me. I put emergency savings in place. I did follow the Dave Ramsey formula. I do like that the snowball effect takes the smallest balance, pays it off, and then works to the next one and just keeps rolling your payments. But before you start doing the snowball effect,
You have two. I have an emergency fund put together savings, whatever I put a thousand dollars in there. Just for the, what ifs in life. And that's really what I was focused in on was making sure that I wasn't stressed about if something came up that I could afford
The cool thing was I was working for a very large employer. They had great benefits. I was putting money away in my 401k, just the basic, just to get matching because I wanted to make sure that I had every dollar I could put possibly. To my debt. Because.
Four years of being gone or four years of paying off debt.
It wears on you and it's tiresome and it's. It's a lot. And I'm sure you've been through it, but it was wearing on me. I was running a call center. And I had close to 2000 people to reporting to me. So my mind was all over the place. And this is part of that. Continuation, or this is the part of the continuation that I wanted to discuss.
I had a system together or. A routine. And that routine was, I needed to make my financial decisions as simple as possible to make sure I got the largest bang for my buck to say. And what that means is. If I could put it on autopilot and be able to know that I can make a monthly payment on a one single monthly payment on a monthly basis, I was eliminated my debt and I could be able to.
Allocate the funds to the different debts I had based upon balance who would work. And I know Dave Ramsey out there says, you don't want to do consolidation loans. I did something better. I did consumer credit counseling. They list all the debts for you and you get to dictate how you actually set your payment up.
They will auto debit your account on a monthly
And then you get to allocate. So let's say it's a thousand dollars Then you get to allocate that thousand dollars to the four or five different debts that you have based upon your direction.
When I found that I, that was like a slice of heaven and I'm like, okay, this is it. I'm here. I've got this going because ultimately that's what I wanted to do. Knowing that it was going to come out on a monthly basis. This was my payment. And I knew where it was being allocated. I was perfectly
It took me some time, several months. I would probably say close to six months. To find them because at the time consumer credit counseling, Was either going through some type of change or name, recognition, removal. I don't know it was something, but you couldn't find it. You couldn't type in CCCS or consumer credit counseling, and then it comes up to something else in San Francisco.
You have to go through this whole process. To find them one and two understand how they can help you because they do settlements. They do all types of stuff.
But in the end. I just wanted to pay my debt off. And get it done. And I had the ability to do it. But I'm also fighting the other side of, okay. How do I generate enough capital on the other side so I can start investing in notes. And that's what I want to talk about this week is. How does this all morph into that?
And how do you take that side hustle and really move it into. The next level to where it's now starting to generate revenue for you. It's not replaced your day job or your nine to five income But it starting to add to the pile. So it's giving you that momentum.
And the only way I knew how to do that was I was started. Wholesaling and I don't know if you're familiar with or not, but so many people are out there. Wholesaling houses. I started wholesaling notes. This was a challenge to say the least, because. Most notes, private notes outside of,
Bank notes that you typically get on a mortgage on your house. These are somewhat hard to find, and you've got to remember, this is 2007, 2008, 2009. All of that good stuff and.
Took a lot of manual work and a lot of digging into. The process and what it looked like. A lot of these people were not using email. There were a lot older least sophisticated. But they understood real estate and carrying a note and how that worked for them. And to be able to find these people, send them yellow cards, send them a letter, cost a lot of money.
And so I was able to befriend a couple people in the direct mail space. And they really helped me out on being able to find an effective way to put a series of yellow postcards or just postcards in general together.
Too. Make sure that I was getting the. I want to say the recognition or the actual eyeballs on the actual cards, because back That's after the it's during, I should say this it's actually during the last downturn and the housing market is crapping and a lot of people are just walking away. So when you're mailing these people.
Postcards or letters they're not around.
But when you mail a note owner note holder, however you want to call it, they are around. Because. That is part of their income. Most of these people were in their late fifties, early sixties. This was part of additional income that they were reporting. And with the housing market tanking,
They did not know if their monies would be worth or their notes would be worth what they were at that point in time. And. I didn't know enough about it to be dangerous, but I did know this.
They were going to have to take a discount and that's just how this works. Dislike a lottery settlement. And guys we've talked about this before.
Lottery settlement. If you win the lotto and you went a hundred million dollars, they're going to tax you and then you're going to get a settlement. You get an option of, Basically an annuity for 30 years, 40 years, 50 years, whatever it So that'd be a fixed payment every single month till the cows come home. Or you can take a lump sum, it gets whacked right in half.
And that's what your leftover. These typically, depending on how they were underwritten and they were actually gone through a closing process like you and I would go to close our mortgage at a title company. Those would actually, get anywhere between 75 and 90 cents on the dollar. But if they were just, I've seen some really bad ones where there's two pages written for a note and that's it, there's no due diligence. There's nothing those will garner nothing. And then you have some in between that are recorded that have some due diligence and a closing file.
So you know who the borrower is. Those will probably get 50 to 60 cents, maybe 70 on the high end. And that's if you're lucky. Because most of the time when they're not underwritten and closed by a mortgage professional, and then moved over to title.
They're not worth anything. And oh boy. I learned that very quick. I didn't waste any money, but I wasted time because I was reaching out to people because I would, I, at the time I had a virtual assistant and he was willing to make cold calls. So I would find telephone number, skip, trace. We would get a list and he would make phone calls. And then if people were interested, he would pass them off to me. And I would call them back most of the time that was during the day. So I'd have to call him back at night. So
That's a whole nother problem or logistics. In this, because you want to hit that lead within five minutes of that submission. And I couldn't, most times, if I could, I would literally close my office door and call, make a quick phone call, may contact, see what they want and then get them to fill out the online form that I created through Google docs or Google sheets or whatever it is, Google form.
But. The amount of private notes that were being funded. And to this day, they're still out there without any type of underwriting criteria. So the laws, this is, if you originate five or more mortgages a year, you have to be a mortgage provider. Or a mortgage producer. And if you don't have a mortgage producer license,
You have to have somebody do it on your behalf. These owners are wanting to skimp on much as much dollars as they possibly And it's hurt them in the long run. It's going to cost them more. Cause it's going to cost them on the backend. So if they would have taken the time to do the due diligence, send it to an underwriter and let them do their
Unfortunately. Probably 80% of these deals would have fallen through the crack because these people didn't have one verifiable income. To you couldn't verify who they were. In three, their debt to income ratio was way off. Like 40, 50, 60%. And then a lot of them were unbankable, unfortunately, where they didn't have, they didn't have bank information or their credit was horrible. And that's why they're doing this.
But if you can't verify who the person is. You can't verify their income. And you can't verify their current renter today, and you can't verify that rent for 12 months. It's very hard to get somebody approved even in the private lending market. And it took me a while to understand that and learn about it and ask questions and engage with people.
So I think we went through probably 40 or 50, like that. I learned a lot. It was a great education, a lot of usage of time. I paid a virtual assistant. I think we're paying them like $3 and 50 cents an hour. To call on these and that time was.
Was valuable. One in two, spent a lot in, I burned through some capital that I wanted to keep in my pocket for other things, but I learned, and I said, okay, we're not going to do this again. So the next piece that morphed into this is how do I find better data? And that's when I started reaching out to repositories or title agencies, or title closers, and started asking questions about what data they carried.
And would they be willing to share some of that data? And could I buy And that was a journey in itself because people are like what are you doing with a private mortgage? And I'm like there's two things I can buy it or I can wholesale And that's what I'm looking
This is now 2012, 2013. So we're aggregating this. You know this data and.
It's hard. It's manual work. Just like the tapes that come in from nonperforming notes. This is all manual to where they send you a PDF I have contact information, then you have to digest it and then you have to put it into an Excel spreadsheet. So then you can go validate it because there's so many things you've got to do.
From the actual front end perspective. And guys, I'm not trying to go long-winded on, on this aspect, but I'm trying to tell you guys this. That side hustle that you have going needs a lot of work and a lot of attention, and you have to figure out is it going to work or not? And. This part of the side hustle for me, wasn't working because I was spending way too much time and way too much capital and I wasn't able to put it to use. Was it.
In probably in the first six to 12 months, I only closed five deals, not even one a month. The spread on these. We're roughly I was making about 2,500 bucks. That's gross. And then you got to think about all the money I put I basically over that 12 month period, I broke even, maybe lost a few bucks and that was it. So I said there had to be a better way to go about this.
And that's when you know, I started reaching out to title agencies. But then this is Getting closer to 2016. I've. I've transferred already. From my current employer, I got recruited to go to a narrow, another very large bank to start up their student loans department, their collections and recovery department. And that brought on a whole nother,
Set of challenges, which cha that pushed my. Routine at night for. My side hustle to its brink. I had to move from Las Vegas. To Delaware. And then from Delaware to Utah.
Moving wasn't the problem. Moving was okay. Great. I went from. Hot during the summertime, too great. During the winter time to hot and muggy during the summertime and Delaware to miserably cold and probably the worst snow I've ever lived in. I've only lived in two places in snow. I should say that lived physically lift Delaware in Utah and Utah is the best snow on earth.
And it was it's light. It's fluffy. It's easy to shovel, but man, it gets cold there. And then.
Com. After October right around. Halloween. If we would get our first snow. So November, December, it starts getting really gloomy. You don't see the sun and then January, February, and into March, you could go weeks without seeing the sun. And you want to talk about being. Depressed and trying to adjust to a new role and starting up a new department and getting everything right. To be able to hire all the right people.
Get the systems in place. They were launching a new internal collection platform, which will ultimately be a servicing platform that was really screwed up to begin with. And oh, by the way, I was traveling to upstate New York because we'd bought a portfolio from another lender that was getting out of the game. So I had a transition that portfolio over.
It was a mess to say the least and.
It wore on me. I gave up, I literally got to my knees and I gave up on my side hustle because it was just taking too much out And. My good friends around me saw how miserable I was. And they said, you know what? You're giving up on something that makes you so happy. But you need to find a way, even if it's small wins and small steps forward to not
And somehow some way the universe, God, whatever.
Brought to our attention. This is the morphine that I talked about earlier. Is. A small Southern. In Southern Indiana city, a friend of the family's friend of the families, I should say. Had hundreds of rental units and I'm talking Some rental units that were ed G pretty bad.
And he was retiring and he wanted to get out. And I was trying to figure out how I can make this
And the best way that I could think of as wholesaling them, because I didn't have the capital. My dad was interested, but didn't want to do rentals and do the rehab stuff. And I was with him. And that'll morph into something even more to closer to what we're doing today. So we started taking some of his empty rentals, understanding what his pricing was in, what he wanted to achieve and started, you
Assigning contracts. It was so much easier. To find cash buyers that wanted to buy a house then notes and the notes piece. Is evolved. Cause I'm still doing that. The piece from the notes is there's probably three or four national buyers that will buy notes nationwide. There's if not tens of thousands of real estate investors that buy wholesale deals that have houses on them because they want to rehab them and turn around and rent them or flip them.
It's just a more common aspect of real estate. So I'm like, okay, this can be done. The first thing I had to do. I had to build a real estate investors list.
What did I do?
I went back to those contacts.
That I was talking to in the escrow departments and title companies and said, Hey. Everybody within a 10 mile radius or 15 mile radius. Of a property. I located like five or six properties that were near the properties in question or properties that I wanted to wholesale. Anybody that bought cash in the last six months. I want those closing transactions.
At first, that was difficult. They were still struggling and still having a PDF meta stuff. But after about six months, they started learning that, Hey, This guy's going to do something with it. Why don't we put it into an Excel spreadsheet? So then they would give me the person's first and last name address.
Email, if it was available and telephone Of course, you have to skip, trace that and make sure that it's valid.
But ultimately. I wanted to make sure that the.
Information was good, but we had the ability to call them because there's a lot of. Telephone consent. Policies that are out there, TCPA, you don't, can't just text somebody and call them without their permission, especially on an autodialer wasn't auto dialing. We were still manual dialing. So that.
That didn't we didn't have a problem then. But ultimately I wanted to make sure that we were doing the right thing at the right time. And starting to reach out to people was key. So I put together a script. I worked with my VA. So this took several weeks to work with my VA to role-play with me.
Overcome. Obstacles, and by now he'd already started, he'd already knew all these things because he.
Had already experienced it. Through trying to wholesale notes.
He was very excited because he understood this, but he also had done it before. But the challenge here. Again, I'm working a day job. I have nobody to refer him to as a closer, so we could actually have that conversation immediately. And be able to close that homeowner. To be able to wholesale the deal.
Assign the con, let them, let them review our contract and then get it assignable. And then I could go out and start marketing it. That was a challenge.
And during this time one of my relatives was wanting to work with us. And I thought, oh, maybe, we can do that together and he could help be a closer, so one of us could be available. To close. He was working a full-time job and it was working a lot of hours too. And he. He couldn't get, he couldn't get the calls either. They went to voicemail, they texted, it started falling apart.
What we did. And this was crazy. Was really get. The process down to two steps.
Teach my virtual assistant, how to really close and get them on a first close basis or first call basis. And then. I would come in afterwards and set up the expectation later than afternoon. We'll call you. We'll send you the contract. You can review it. And then we'll actually start talking about
We'll negotiate And then we'll get you locked up and call it a day. That was rough. At first, it was rough for several months. But my VA got very good at it to share the contract, let them review it. So there was no pressure. We wouldn't give them any type of pricing initially up front, they would always ask that.
We would always tell them, have a number in mind, but realize we're going to go to a.
Retail market potentially. And they're going to want to have some, they're going to want to have some meat left on the bone and to do that. You're going to have to.
Take a little bit lesser of a. Price. On your actual. On your actual sales.
And a lot of those owners struggled with that in your hat to explain to them that. If you want to sell this quick. We need to be able to price it right. And be able to get it out to the market, into the investors that are looking to buy in this area and make it quick. Otherwise. We can start at this high price and you're going to get zero action and then lowering it down is just going to cause you more heartburn and headache. So let's just set you up for,
Reality, but also success. And this took time and effort. And by no means I've never wholesaled real estate. Other than notes, before And that was a very interesting. Concept for me. Because you're talking to. Many people in different lives. In different stretches of life in different places And they all have different needs. So if you become an active listener, making sure you understand what's going on.
You'll be successful and we would record phone calls. We would let them know. And it was for training purposes. And we would go over with them, the VA and say, what went well and what didn't went well, what did not go well? And make sure that we actually.
Trained the VA. To be effective. And this is going to be the last piece of this episode, If you want to be successful as an entrepreneur, and this is the same thing in. In corporate America, if you want to be successful. The people that work for you or work with you. You have to train them properly. You got to give them the tools. They need to succeed. One.
To engage with them on a healthy level. So you understand what they're going through and in work with them. And the third piece. Is make them feel valued. They're part of the team. And I know that's easier in corporate America today. Little bit less, but back then it was because we were all in the office.
But nowadays we're all remote. Guess what? My VA was in the Philippines, so I would have a daily contact with them. I be going to work. We would have a conversation. And if I got up early enough, I would have a Skype call and we would see each other face to face. Talk about what's going on for the day. He would give me any needs that he wanted.
Or I was behind on and I would get it taken care of. And then we would go on our ways and we would Skype. We would Skype message in between.
The biggest challenge that I overcame in this process was finding an effective way to make sure if I was going to scale.
I need to give my VA all the tools that he needed to be successful. And that's where I'm going to leave you guys. This journey of entrepreneurship. If you're going to grow your business, you can't do everything and you can't expect your employees. To do everything. Without being trained. You as the entrepreneur, the business owner, it's on you. If your employees fail, it's your failure because you're going to have to come clean it up. So just like those owners have notes on the front end that didn't do that. Didn't do the homework and do the work to underwrite their loans.
They fail and on the back end, they pay for it. This is the same concept guys. Train your employees effectively up front. Give them the tools they need. I engage with them on a healthy level. Make sure they feel like they're part of the team. That is a huge win and it's a huge change for. Anyone. And when I started doing that better and more effective.
We started seeing results and I'll share that in episode four, down the road. I hope you guys have a great one guys. Thanks for listening in like share comment. I love your guys's feedback. I'm enjoying it. I hope you guys are enjoying this roller coaster of a ride that I've been on my entrepreneurship. I'll talk to you guys later. Have a good one.