Be The Bank
Be The Bank
003 - Yin and Yang
Imagine transitioning from a steady 9-to-5 job to the exhilarating world of real estate, where every investment is a step toward a future you design. That's the story of Lauren Wells from 7E Investments, who joins me, Justin Bogard, in a riveting narrative of her career metamorphosis. This episode promises a fascinating exploration into the world of real estate and note investing, revealing how strategic networking and sheer perseverance can lead to incredible success. We dive into the benefits of mortgage note investments for those looking to avoid the headaches of long-distance property management and dissect the vital role of synergy between business partners in propelling a real estate firm to new heights.
Resources and links discussed:
- Videocast on our YouTube Channel
- ANB Funds Website - https://anbfunds.com
- 7E Investments - https://7einvestments.com
About the Host:
Justin Bogard – Note Investor specializing in performing Residential Real Estate Debt. He finds deals and acquires them for his own portfolio as well as educates investors while walking them through the process of owning a Real Estate Note!
Connect with the Host:
Facebook - bethebank
Twitter - bethebank1
Instagram - bethebankpodcast
American Note Buyers - https://anbfunds.com/
Monthly Broadcast - https://youtube.com/playlist?list=PLzc944w1xydt5aLDrrEPHJhdJeDkBjjD4
Interest in real estate. How about wealth? Well, they go hand in hand, and here you'll learn all about it. Welcome to Be the Bank, a podcast where we discuss and debate the topics centered around real estate investing. Your host, justin Bogart, shares insights into investing in real estate to create real wealth and passive income for you and your family. He'll share stories of real estate investments done right, walk you through the process of owning a real estate note and, most importantly, educate you so you can Be the Bank. This is Be the Bank, brought to you by American Notepad. Now here's your host, justin Bogart.
Justin Bogard:Hey, hey, listener, this is season number six, episode number three coming at you. I have a guest today, ms Lauren Wells. That's going to be on from 70 Investments. She's got a nice little background I've been in the business for a little bit and definitely is making waves and has a lot of experience on the subject of note investing and other things related to real estate. So you guys are going to enjoy this episode, so stay tuned. Well, hello, lauren, it is a pleasure to meet you.
Lauren Wells:Thanks, Justin. Thanks for having me today. Glad to be here.
Justin Bogard:You're welcome. This is the first time I'm actually meeting you over the internet or anything. I don't think we've ever been at a conference at the same time in the real estate note world. So yeah, this is our first time.
Lauren Wells:Yeah, yeah, I used to go to all those conferences, but now my role has shifted a little bit, so I'm onto a different set of conferences.
Justin Bogard:Yeah, I bet. So, speaking of the different set of conferences that you go to, I'd like to kind of give the audience a background on who you are and kind of how you came to found the 70 Investments Company with Chris.
Lauren Wells:Yeah, you want to go ahead and dive into it.
Justin Bogard:I mean you don't have to go all the way back from birth, but you could go back, you know, at least several years and kind of what you did in the W2, there's some air quotes here, W2 world, until you get to today.
Lauren Wells:Definitely I don't know kind of who your listeners are, but I'm going to just imagine that maybe some of them listening might be people who have W2 jobs.
Justin Bogard:There's only three of them, so I could probably name them for you.
Lauren Wells:You, me and one other person, the person.
Justin Bogard:Chris is the other one.
Lauren Wells:yeah, so, you know, I was essentially a listener who had a W2 job and was thinking about all the ways to get out of my W2 job and that buzzword of passive income and how do I get there? And I'm a big networker, I am involved in a lot of real estate groups and Arab was at the time. So how do I? You know was networking with people, see what other people were doing. And mortgage notes appealed to me because I live in California and I wasn't really too keen on investing in property out of state and California is a big pay to play. Yeah, you know, get into the rental market. So I was like, well, I can do mortgage notes, I'm okay with that outside of California and then I don't have to manage the property and becoming the bank, like you said, be the bank.
Lauren Wells:So I got into that. I started with second position mortgage notes. I found a mentor in the space who did seconds and learned all about how to look and analyze a tape, the due diligence process, did a lot of free work for him, learning. And then I heard Chris speak at a conference, a virtual conference, and I, you know, loved everything he said. I think his topic of his presentation was like how you're going to lose all your money and no investing.
Lauren Wells:I was like yeah, this is what I need to know. Risk like a risk mitigation Great. And I basically reached out to him on LinkedIn and said hey, enjoyed your conversation, We'd love to grab coffee. While he ignored virtual coffee. He ignored me. Yeah, I reached out like two or three more times. It was like I'm kind of persistent like that.
Justin Bogard:Yeah.
Lauren Wells:And someone, a mutual connection of ours, was like, hey, she's not crazy, you should connect with her. So we connected and we did a ton of just kind of coffee conversations where I would ask him a ton of questions about, you know, I was trying to navigate the jump from second position to first position mortgage notes, and so that's what he did and so I learned a ton there and eventually he asked me to help manage his other, help him manage his other funds. So I helped on the asset management side and then we kind of formed this. We kind of we did about two years ago now launched a larger fund, two larger funds rather together, and kind of divide and conquer the business into the acquisitions and asset management and then me overseeing capital raising and investor relations and operations. So that's kind of where we're at today.
Justin Bogard:Wow. So you start to press to get a job. That's what I heard.
Lauren Wells:I talked to. Chris to learn, and it somehow ended up that we're now business partners in this wild adventure.
Justin Bogard:He talks very highly of you, just so you know oh geez, yeah. So he commends you on all the stuff that you've done and gives you a lot of credit for making the company the way that it is today. So just want to make sure you get your props there.
Lauren Wells:Oh wow. I think it's a yin and yang is what we are, and so our strengths play off of each other, and so it works.
Justin Bogard:Yeah, I always tell people when they first get started in this business if you want to have a note business, you really need to have a partner with you. It's really challenging to do this by yourself because there's just too many things to do and you just need the help. Exactly what you said, which is why Richard Thornton and I we had partnered together until he retired recently and that was the yin and yang. He was not detailed at all. He left that stuff to me and I was like, okay, this is, I feel comfortable with that, I'll do more deep stuff. And then he handled more than investor relations and raising capital stuff. But now he left me with a back in my hand. Now I got to figure out how to do this stuff. You're on the show today to teach me.
Justin Bogard:So when you got into mortgage note investing, did you also have experience like in real estate investing like flipping houses or commercial deals?
Lauren Wells:Yeah, great question. So I, you know, before the show we were talking about our kids and I'm the oldest of three girls and I grew up around real estate. My dad was just, he sold real estate, so sold real estate, and then he started when I left for college, got into, you know, his own buying holds and kind of grew his real estate portfolio Me being the oldest and I see this in my oldest now. You know you tell them one thing and they're going to do the opposite.
Lauren Wells:So I think that just followed me and I was like I'm not doing real estate, I'm going to go and I'm going to do that like Silicon Valley life, I'm going to work at the startup, go through the IPO. And I did that and I, you know, found my kind of niche in business development and I loved it. But I realized light bulb went off and I was like, shoot, Maybe my dad was onto something about, you know, having this freedom if you're investing in assets that pay you. And so I kind of went back and started that's kind of where my, I guess you could say, research journey began into what different asset class do I want to go into and how do I want to build my own portfolio with starting with my own capital.
Justin Bogard:So do you like seconds or first? Better now that you've done both.
Lauren Wells:Oh well, right now I like first better. When I was doing seconds it was. You know the coverage was insane. You know you weren't really going to have to worry about being underwater Right now. Seconds wouldn't be something I'd want to really be in second position, yeah, first, I like first. Better, just to answer shortly, yeah.
Justin Bogard:Yeah, and do you? Did you ever get into seller finance paper, or you mainly tried to?
Lauren Wells:I looked into it. It was one of so you know, you decide on mortgage notes, yeah, and then within that there's first, there's seconds as seller finance and there's all these different kind of experts in the space. So I remember reading a lot that Fred and Tracy would put out about seller finance because they're kind of the go to in that space, right. So, yeah, I looked into it and at the time I was like this to do this, well, I need to be like in sales mode, I need to be finding and sourcing, and I was like I just I was a mom a new mom of two at the time and I was like I don't have the bandwidth to do that right now.
Justin Bogard:Yeah.
Lauren Wells:Like you know. So I stayed in seconds and then moved into first.
Justin Bogard:Okay, yeah. So when you are working with potential investors that can get into your fund and you're raising the capital, are you educating them on the general aspects of like note, investing not really getting into specifics of first and second, or like, how do you approach that with education?
Lauren Wells:Yeah, great question. So what I've learned is some there's a big emphasis on education that Chris and I have. You go to our website. We have webinar upon webinar upon webinar of what we do, who we are, how mortgage notes works and even though to you and I it might sound super simple and like we're repeating ourselves constantly, you know mortgage notes is not something people are talking about. It's not like the most known about asset class, and so what we say and how we've broken it down is kind of comparing it to fixing and flipping homes. Yeah, so we say we fix and flip mortgage notes. That's kind of like our how it resonates with people.
Lauren Wells:So how do we get people who want passive income, want to invest in real estate, don't want to do it on their own and maybe I heard a little bit about mortgage notes or somehow you know they ran across, chris on bigger pockets how do we get them to understand what we do and why we do it? Well, and so again, a big emphasis has come across. We don't really break into first and seconds because we really primarily focus on first for our funds. But really, walking through, what do diligence looks like? You know what are the investor's concerns, you know, and kind of trying to answer those while also educating them. So, risk is this? What's the risk profile of mortgage notes in today's economy? How big is this market? So, giving them, educating them over and over, you know. Again, we do like monthly webinars at this point and we've gotten a lot of great feedback on that, because people want to know at some level, they want to understand what they're investing in.
Justin Bogard:Yeah.
Lauren Wells:Yeah.
Justin Bogard:They want to know how it works, but they don't want to go out and do it Correct. Before I buy this packet bubblegum, I want to see how it's made, see what's in it. Okay, I'm not going to go get a factory and make it, I'm just going to go buy it from the side. That's already ready for me.
Lauren Wells:Yeah, or, like you probably know, we do have people who think they want to build the factory and then they get into it and they're like actually note, here I'm going to invest with you. This is way more work than I thought.
Justin Bogard:Oh, I didn't know it was going to be a job.
Lauren Wells:Yeah, yeah. I didn't know that I didn't know that getting into it.
Justin Bogard:So Passive income sometimes is not as passive as you want it to be, unless you are on the investor side, like investing with in a fund that we both have. That's, I think, is the trick that people don't understand. Even being a landlord, as you know personally, being a landlord tonight, reluctantly, had some rentals it's not passive income by any means. It's hard work, you know, especially if you don't have things well-oiled in your operations, which is why business development, the skill set that you mentioned earlier, I think is so vital for an operation, because you have to treat it as a business, you know.
Lauren Wells:Yeah.
Justin Bogard:Everything in its core function is a business, no matter what you're doing in real estate, and I see a lot of investors kind of fail at that aspect and they don't understand the financials of how to run a business and things like that. They're just like, yeah, I'm really good at wholesaling, so I'm just going to make a business out of it. It's like you look at their books and you're like what is going on here? How are you making money? Like there's no way you're making money. You know, yeah, it's kind of funny, but so education is great.
Justin Bogard:I think that is the perfect way to start the conversation, because everything I feel like from investors from the first time this is like taboo to them. Like it's like oh, I've heard of seller financing, but you know, if they don't see a I want to say a large influx of cash, they assume that that's not really a profitable investment. You know they're not. They're not looking at it. As you know, this is your retirement money. This is something you're building towards. This isn't like you're going to go flip a house and make 100K in California during the heyday, you know, at any moment, and have this influx of cash and become an overnight success. That's not what this is, you know.
Lauren Wells:And I think that's such an important point that you touch upon, because right now, if you look at any of the I don't know people, if people are listening on bigger pocket forums or you know, I'm part of a ton of investor communities- yeah.
Lauren Wells:And the common theme is capital calls, distributions are being paused and or syndications that have gone completely under, and part of me I could write a whole LinkedIn post about this feels bad and I do empathize with these people because it sucks to lose, but also, like you just mentioned, the last pre 2022, the 10, the decade prior to that you could place money probably anywhere and win.
Narrator:Yeah.
Lauren Wells:Well, so due diligence I feel like the due diligence people put into not just the asset class but also the sponsor, just dropped. They were like they were. I call it yield chasing yeah, what's going to give me the highest return, like you know, and it worked, it did. People made a lot of money, yeah. However, we are not in that economic environment anymore. So the investors that you're speaking to another part of like what we focus on, and this helps us maybe, but also might not, depending on the investor's risk profile.
Justin Bogard:Yeah.
Lauren Wells:Is educating them on questions they should be asking. Yeah, when you're talking to a sponsor, what they do is important, but their track record, their time in the business, their communication and transparency is also of utmost importance. So I think that's something that we focus a lot on as well, because just how do we empower our investors, or potential investors, to safeguard their you know, their capital?
Justin Bogard:Yeah, it feels like today because I've been paying attention to it a lot more the last six months than I ever have with hosers in our industry, and especially multifamily, because of the challenges that they're going through and they make it seem like it is just pouring gold out there right now and I just feel really bad for the investor.
Justin Bogard:That just doesn't really. That's buying into the sales tactics and not really divesting their time into understanding the sponsor and their education behind it. A couple of these people actually know personally in the multifamily space and I'm seeing this stuff on LinkedIn just so that you everyone listening out there knows what I'm seeing out there. But that's where I see the most like advertisement and push and I think it's more of the players in the multifamily space because they're desperate right now yeah, desperate for raising capital. They're desperate to find deals, they're desperate to get capital raised so that they, like you mentioned before, because of pausing distributions and because of you know, asking investors can you please put more money in? And oh, by the way, I'm not going to be able to distribute any, any proceeds to you next quarter.
Lauren Wells:Yeah.
Justin Bogard:You know for this, that and the other, and I do feel bad for the investor as well out there, but they do have some challenging stuff in front of them and because of all this uncertainty they might not know where to put their money, which is probably why the self-directed IRA companies, cash on hand continues to rise and I want to say it's probably getting up to the hundreds of billions of dollars by now, I'm sure all the IRA companies combined. I don't know if it's the trillion dollar number yet, but it's, it's up there.
Lauren Wells:It's probably creeping up there.
Lauren Wells:I mean I had imagined, but, yeah, I mean you're probably seeing the same things I'm seeing and, as someone in business development and I guess you could say sales, it like kind of makes me cringe when I see some of these things.
Lauren Wells:I'm you know cause I can see, you can see, like, okay, clearly, look at this guy's background. Did he start five years ago? What has he done? Or, you know, a common thing I'm seeing is and Chris and I have talked about this at length is, you know and it drives us nuts is you have a debt fund all of a sudden, like a multi-family you know development fund is like, oh, we have this debt fund, but the debt fund is needed to help make sure that their other investors and their development fund don't, you know, take a huge hit. So, yeah, kind of like, what does that mean for? Like, where are people falling in the capital stack? Is it really a debt fund? Is it dressed up as a capital call, you know? So how do you, I guess? I feel like we can probably do a whole you know series on how do you spot like yeah.
Justin Bogard:Rodsters, because I don't think the classic Rob Peter to pay Paul. Yeah, but they're shifting money around because the government isn't printing them money. They're getting money from the consumer and the consumers wanting the product that they're offering. So we, you know I don't know the exact details of your guys's phone, I'm sure it's very similar to what we do but when Richard and I started the fund, we said what are the things that people are looking for? They're looking for short term, which you know One to two years will say short term. They're looking for a complete passivity and they're looking for a lot of security and what they're doing, and they don't want it complex. And so we said, okay, we'll have a true debt fund. We're borrowing money from the investors and we're paying it back and that's, that's just it. Keep it very simple. There's no waterfall distribution, there's just. You know, the asset class we're going against is a lot lower risk than you know Building a multifamily unit. That's just gonna go vacant.
Lauren Wells:Yeah so yeah, and I think it's hard, because how do you explain, I guess? I don't know if this is a good analogy, but I kind of came up with it and we're gonna tweak it until it gets right.
Justin Bogard:All right.
Lauren Wells:I feel like here we go. So do you know what foster freeze is? I think they have that everywhere. It's like the ice cream, the classic vanilla ice cream cone.
Justin Bogard:Is that the brand name of the company?
Lauren Wells:Yeah, the company's. I've heard of it.
Justin Bogard:No, okay, so I'm a, I'm a, I'm a Hoosier. Okay, we don't get much things.
Lauren Wells:They were like Somebody listening will know what foster freezes but it's probably will. Yeah, I'll be the only one vanilla ice cream and you could get it dipped in chocolate if you want. That was like as fancy as it got.
Lauren Wells:Okay so I feel like mortgage notes and the way our fun and I I don't know much about how your fund is structured other than what you just said yeah are very much that like classic stable. You know what you're gonna get. There's nothing fancy. We're not saying we're promising 20% returns yeah, but you know we're gonna hit doubles and see in triples, maybe a home run every now and then. But like our goal is cut that consistent Income for our investors.
Lauren Wells:And I feel like these funds in the last you know Decade that I've come out. I'm not trying to pick on multifamily, but it's what I'm seeing right now. So I'm just gonna go there. You know, there, or opportunity zones or oil and gas, it's like, hey, we can promise all these crazy awesome things and we'll give you all these high returns. And I kind of feel like they're like the cold stone, like sounds good, might be good, might also make me completely sick. So do I want to be like basic? So it's, I feel like you kind of have. I mean, everyone should have some cold stone in their portfolio. But right now it's how do you keep your money? Yeah, how do you not lose money?
Justin Bogard:Yeah, I like that. Your baseball analogy is great. We just trying to get singles to be honest with you. We're just.
Justin Bogard:You know, when I I'm not sure how old you are, I'm assuming you're younger than me and so when I was growing up it was always like when you get your paycheck, you know you put 10% aside, you know, after you've already put money into your 401k and and your company has matched it and what for? You know what not, and so the company's 401k manager would just go out there and just make sure that the funds out there were just returning Like six, seven percent like clockwork all day long, very low risk stuff. And I feel like that's what the investor should focus on right now, with the uncertainty going on, is, if you feel like there's an opportunity to make a bunch of money, you should be actively going after it. If you're trying to make active money and be passive in it, that's that's the recipe for disaster, because I think that's when they get caught with those yield goggles on and they're trying to get those big returns and be like wait a minute, I didn't, I didn't get paid last, last year. You know what's going on here and I so.
Justin Bogard:Yeah, hopefully investors are just realizing that you know they need to do real estate. Cds is what I call them. That's what our funds are, you know, low risk. They're just, yeah, constantly churning your money. They're not gonna make you, you know, 30% or anything like that, but it's just gonna make you grow and the risk of you losing your money is significantly lower.
Lauren Wells:Yeah, I agree.
Justin Bogard:Yeah. So what is the Typical? What I want to say I don't have lead time is the right word, but what? What is the typical? I guess lead time for an investor that just Figures out like hey, there's mortgage note investing and 70 investments is having a webinar and stuff, like typically, when do they start getting curious to be like I'm ready to make a decision on this, is the investment for me or not?
Lauren Wells:Yeah, I think it just depends on where they're at in their overall investment journey We've had people and then what type of investor they are.
Justin Bogard:Okay, that's the fair.
Lauren Wells:Yeah, so like are they? You know a w2 employee who's like, hey, I should probably look into passive income options, real estate sounds good and they come across, you know mortgage notes and us. That's probably a lot longer of a play. It is a lot longer of you know. They might be on our email list watching webinars in the background for six months to a year.
Lauren Wells:Yeah whereas Someone who's pretty savvy might have a self-directed IRA and just might be looking for options that could be a quick you know one, two months and Then, as far as like, we've had investors who have been on our email list for six months and then they'll drop, say a hundred K, and we're like we never talked to you again. We have a reggae, so it's allowed. I'm not trying to. We're not breaking any rules right.
Lauren Wells:Um, but you know, and then we have investors who will be on our you know list for a month but then they need to talk to us probably five or six more times before they're ready to invest. So it's definitely runs the spectrum of like, how long have they been looking at an alternative investment and what's their investment knowledge? And then, really, how comfortable are they with I, chris, and I, you know, in the team?
Justin Bogard:That's a good point. I I agree with everything you said. That's been my experience as well, and the the people that end up pulling the trigger the quickest are the ones that have the most Disposable income, because I feel like they've already educated themselves in the space and if they stumble across one of us, it's like okay, I'm once, I'm comfortable with the sponsor, then I'm ready. I'm ready to go.
Lauren Wells:Yeah, yeah, and I think it's a big something that's We've seen a lot of success with and I don't know about you, but is For our retail investors at least.
Lauren Wells:They really want to know who are Chris and Lauren, what is their background, why should I trust them? And like our backstory even? You know we just did a webinar last this month it's January, right, yeah, this month about you know our backstory, our whole back story of why we launched this specific fund, this offering, how we met, how we got into mortgage notes and our backgrounds and our you know, kind of pads to mortgage notes are yin and yang. So we and we received a ton of great feedback on that because I think once they get to trust you, then you can talk about the details of your fund. But if they don't get a good sense of yeah, I feel like this person is gonna do right by us Good times and bad. If you know they're gonna communicate, then talking to them about the details, no matter how great your offering is, is it really gonna sit with them until they bought into you as a person and a sponsor?
Justin Bogard:Yeah, it makes total sense. I think there's too many salesy people out there that are just trying to herd cattle through their Operations and see how much money they can pull from from that herd. And I, you guys approach it the same way that I do and I'm glad that you do, which is obviously, while you guys are very successful because you guys are doing it In much greater volume Is everyone on that calls my friend. You know it sounds easy, but they're my friend. I mean, I talked to him as if they're my friend, I joke around with them and stuff, and then we finally get to.
Justin Bogard:You know, whatever is it, I do, or however, I can help them, and so it's always like a help. How can I help you or how can I pass along knowledge to you? And then, you know, sometimes the byproduct is, you know, I get, I get an investor in the fund, and sometimes it's just hey, maybe down the road there's an opportunity where they can create a note and I can help them or I can buy that note from them and stuff. So, yeah, I fully agree it's. You know, I don't like being salesy in general. I feel like I'm not a salesman. Even I'm supposed to be a salesperson. I just, I just want to be their friend, lauren. So all right. So 70 investments. You guys have been open for two, two or three years.
Lauren Wells:Yeah, so 70 has been around for just under a decade. This, these off, these two offerings that oh yeah. I've been around for the last since almost two years. Now, almost exactly two years.
Justin Bogard:And one of the two types of funds. Yeah, so once a reggae, but yeah, so we went.
Lauren Wells:We started with the regulation, a offering which, for people who are listening may or may not know it essentially is think of like crowdfunding for real estate so we can market to anyone, we can accept funds from credit accredited and non-accredited investors and there's a low, you know, barrier to entry. So our goal there, when Chris and I like you something you said earlier was like when you and your business partner were creating a fund, what do investors want? So when Chris and I created this fund, it was when, like, what did we want? Because I wasn't accredited when I first started, it started in note. So what do we want?
Lauren Wells:What did we wish we had access to at the time when we got into notes? And so we wanted something that was accessible and available to everyone. So low minimum available to non accredited investors. And so that's the reggae and that's really, you know, taken off in. Then we also launched the regd, which is 506 C, and they run alongside each other and invest in the same portfolio of assets. They're just kind of two different Ways to get into the same fund.
Justin Bogard:Okay, so you've reggae and a regd, and they both are the 75 million yeah, so it's 150 million.
Lauren Wells:Between the two, 75 each.
Justin Bogard:Okay, very cool. So I was gonna ask you something else now it was it wasn't related to the investor stuff, it was I. I asked a friend of mine last time I had him on the podcast, I think his name is Jay and I asked him what? No, I wouldn't ask. I asked Richard that's what it was. Last season I asked Richard like what was his most favorite thing about real estate investing over his whole career? And he'd been doing it like 35 plus years and stuff. So, out of your career so far, what's been your most favorite thing that you've liked about real estate investing? And my Richard's answer Was a surprise to me because it was the same as mine, even though we both don't do it anymore.
Lauren Wells:Oh no.
Justin Bogard:I'll let you go first.
Lauren Wells:Yeah. So my favorite thing about real estate investing I think it's just the ability to be creative and for me it's the impact too. I'm looking at it now from the fund perspective, not like the individual perspective, but for me this reg A getting emails from investors who are able to retire that to me is the most and maybe that's a very woman answer. I'm sure Chris would have a very different answer, but for me this journey along the reg A and making this accessible to people has really been like it started out as a passion project and it still is and it's super fulfilling and something I get a lot out of. It's funny because it's not what probably most people would say where it's like I love the passive income, I love the ability to work from anywhere and whatnot. For me that is all great, but I really love seeing how I guess we can provide that opportunity to other people is that's been kind of one of my highlights so far.
Justin Bogard:So I giggled before I ask you that question, because Richard and I both absolutely love the design part of flipping a house but at the same time we hate it. So that's been. The most fun for me was I got to have a have a clean slate and then I got to redesign around it and I always thought that was kind of neat. I was not making money doing that, which is why I'm not doing it today, but it was just fun. What I like about the note business that keeps me intrigued on it is is no two notes are the same and when you go and evaluate a deal you look at it and I just laugh because I am one of those people that was. That's still very analytical. But when I started out I am no different than any other engineer that comes into the space to where they look at it and be like how do I throw it in a spreadsheet and it spits out a?
Justin Bogard:number of times I have my answer, I'll be like it doesn't work that way, buddy. You got to have your your six shooter to your, to your hip, you know. You got to be ready to to gunsling a little bit. You got to have it as an art. It's a science, there is math to it, but you have to blend a bunch of things together and there's emotion involved in it. And there's another, another a borrower is. You know its own character.
Justin Bogard:To me it's just fascinating, and so I don't think they'll ever be market price for something. I think you just have to look at a ton of different things and then what your capital stack on, what you're spending, and then what do you need? You know most of us are borrowing or leveraging money in order to get some of these deals to do a mass volume. So obviously we have to be wary of, you know, underlying debt. But that's what I think is fun about the note space is that it's so unique, it's so different every time I look at a deal.
Justin Bogard:I just laugh when somebody says, oh yeah, here, I'm just looking for a 12% return. Okay, that's that's. Your goal is to get a 12% return. Like I'm sorry, but it's like there's a lot more to it than that, like there's a risk involved. Like you know, most of the time when people want to make that big return, they don't understand that there's going to be some hair on that deal, especially if it's a performing asset and they want to get a high, double digit return. It's like, okay, you might, you might get 10 payments this year, but okay, you know, if they may make 12, then you'll get that return, but you're lucky to get that far, so anyways, that's, this is kind of my yeah, what's going on?
Lauren Wells:It's not specifically. I think that's something that Chris and I talked about. It's like and we talk about one on our webinars. It's like there's no one way, no two notes. Like you said, no two notes are the same, and it allows you to be super creative, especially because we're getting these a discount in our case. So you know, to be super creative. Chris definitely would do exactly what you would do throw it in that spreadsheet. But there's also, like you said, that human element of it, because you are working with people in their different situations and kind of having to blend the analytical and the emotional side of it to, you know, make the best decision.
Justin Bogard:Yeah, it's. If you're not, if you haven't been well educated in this space and haven't seen a lot of different types of deals you know, from seller finance to conventional loans like to see the different types of borrowers and situations of. You know, low value properties versus high value properties and and you wail it in there. I have a deal I've been trying to sell in one of our portfolios forever. There's nothing wrong with it. I just trying to liquidate the LLC that it's in and it's in bankruptcy and I've had it since it's been in bankruptcy. There's absolutely nothing wrong with it.
Justin Bogard:But I think, because the word BK is on there and it's kind of a lower value asset, that people are really afraid to do it. But it's been paying like clockwork for 28 months in a row, like not even a blip on the radar, and even one of the borrowers passed away as well and they're still making the payments. And it's not even and there's and there's, you know, obviously a principal balance on the back end as well as a bonus kicker, you know somebody would get, and whenever they sell the house or the refi it in the future, and just it. Just I just laugh and go. I don't understand why nobody wants this deal and I even have it at a very high, you know, yield. But it all comes down to, you know, their perception of what's going on.
Lauren Wells:Yeah, yeah, I had. Actually I purchased one that was in BK and they were making consistent payments and then some to get caught up through the BK you know system and so. But yeah, for people who aren't familiar with kind of how bankruptcy works and at what different stages, yeah, it would probably seem like a bad asset, even if it is paying and you're making money on it.
Justin Bogard:So, yeah, I think that's a good way to do it.
Lauren Wells:Lauren, how do we get ahold of you if we want to ask you some more questions? Yeah, I always say email me directly. You can find me on LinkedIn, lauren Wells, but I also you know welcome email.
Justin Bogard:So Lauren at 7einvestmentscom. So I'm going to start with you, lauren. Do you have an underlying company or 7einvestments is what you guys are?
Lauren Wells:7e is the. It's funny, we get this a lot. So the it's C Corp, it's CWS Investments Inc. But our DBA is 7e. So everyone knows this is 7e. And when we tried to make that shift to CWS, some of our older investors who've been with us for a while like seasoned, I guess, veteran investors were like, wait, you have a new offering. And we're like, oh gosh, no, let's back up 7e, we're just going to stick with the 7e.
Justin Bogard:So yeah, it's so tough to make changes. When Richard and I combined companies, I had switched from you know, it's all a bright path, and now it's called American Notebuyers, and it was. It was really funny to be like. I would never have thought this would have been, you know, confused, yeah, like yes, I can see how it's confusing when you don't deal with it every single day.
Lauren Wells:So I was like okay, you know, as investment managers, like fund managers, as what we do is like so analytical and in the weeds, you're like this I'm getting hung up on the name right now. Yeah, Not oncoming. Yeah, so it took us a bit, but everything now is 7e.
Justin Bogard:Well, it makes sense. It's a name that has stuck for a while, so it makes sense to keep it that way.
Justin Bogard:So, lauren, it was awesome to get to know you during this podcast today. Hopefully we'll get to hang out a little bit more in the future and get to know each other. Yeah, now some more fun conversations, but thanks for being on the podcast today. I really appreciate it, lauren. At 70investmentscom, you can check out their website, 70investmentscom. You can catch the video stream of this on the American Notebuyers YouTube channel, and I'm Justin Bogart with American Notebuyers. This is episode number three of season six on Be the Bank podcast. We'll catch you guys on the next episode. Bye, lauren.
Lauren Wells:Bye. Thanks for having me.
Narrator:You.
