Scott: I’m extremely jacked up to have our good friend, Brent Garrett, joining us all the way from Southwest Florida. Brent is not only a friend. He’s also an amazing investor. One of the best real estate agents that I have ever met. If I could clone you, Brent, I would clone you. First, you’re also a note investor as well besides being a real estate investor. As we continue our series, one of things we’re doing with our podcast is focusing on different markets across the country that we see a lot of opportunity in, have seen an opportunity and we expect to see continuing opportunity. Brent, why don’t you share with the people a little bit about your journey and how you initially got into the note space a few years back? We’ve known each other going on five, six years now?
Brent: It’s more or like ten almost. I started out working in real estate traditionally when the market obviously crashed. I got introduced to a couple of gentlemen that got me going to conferences to start working with the banks. I ended up being able to get in with a few banks to start selling their foreclosures and from there, I met a few hedge funds. That led me in a different direction as opposed to buying foreclosures. We ended up starting to purchase notes part-time as long as selling real estate and selling foreclosures. At the peak of the foreclosure market, we were selling roughly 70 to 120 foreclosures a year. From there, we started to transition into buying the foreclosures. In our market, it’s a little bit more difficult. There are a lot of investors here. Everybody jumped on the bandwagon at the same time.
Prices started to rise on the purchase of foreclosures to where you’re almost paying retail for a foreclosure and there was just not a lot of margin through that. I met the hedge funds and they said, “We have these notes we’re selling. I know you don’t know what you’re doing, but if you can figure it out, it’s a great opportunity.” I purchased a couple before I went to your classes and relied on the local attorneys in the area to hold my hand, walk me through the process of what to do, what not to do. From there, I went to your classes and learned quite a bit and sat and just soak in as much information as I possibly could. I came back and it’s been sky high ever since. I went a little bit more into the local attorney side to purchasing now just because it seems like the major operations, their prices were starting to rise. In finding the local attorneys that know people who do like one-off owner financing deals and then the people just don’t want to deal with the process of foreclosing on it. I’ve been able to actually stay underneath the market, and still be able to purchase at about $0.50 to $0.60on the dollar.
Scott: That’s such a great nugget that you just gave there. A lot of people get lazy going with the low-hanging fruit, and we see that in the note space. We see a lot of REO refugees. People that were used to buying from REO agents or buying at the courthouse steps but they’re not seeing that product anymore, right?
Brent: In our area we’re down in foreclosures. In January, there are only 85 foreclosures sold. I used to go from getting anywhere from pre-marketing to sale, I have probably about 50 properties in my pipeline at any point in time. At this rate, I’ve got three in my pipeline right now. They expect that we’re supposed to be getting some newer inventory, but the problem in our market is that as a foreclosure agent, when a bank asks me to list a property, they make me do a valuation, a BPO, a Broker Price Opinion. When I do that valuation, I’m comparing the property to fair market value properties. That in essence, unless the property needs a ton of work, I’m going to be paying almost retail value for that property, which is just not feasible to make money doing that if you’re going to be turning the properties.
From my perspective, the note game is still where it’s at. There’s getting a lot more players in here as well. I guess my market’s a lot different just because everybody knows Florida’s a really big market. You’re not necessarily overpaying, but you’re paying a premium to be in Florida. If you find the right avenues, like I have now, which is really reaching out to the local attorneys and putting my money where my mouth is. If they bring me a deal and the numbers are clean and the paper is clean, I buy them every single time so the guys know they can come to me and rely on me and it’s been well.