KSS 61 | Building Relationships

It is so easy to fall trap into the pressures of the person you’re making a deal with when you are just new in the business. That is why it really helps to understand the business first and foremost and look at deals a bit more than most people would do. In this episode, Kevin Shortle invites one of his students to share with us how he is helping clients get accelerated results. He has over Steve Cunningham of Pragma Realty, who used to spend fourteen years in Corporate America before pursuing a career around real estate. Here, Steve shares with us the interesting story of how he found a note and what it is going to lead in the future. He talks about some of the familiar concerns many new investors have—from overcoming negotiations and doing due diligence to proving yourself and building relationships in this industry. Follow Steve’s journey in this conversation and gain some very helpful insights that will help you navigate the real estate investment field.

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Negotiating Deals And Building Relationships For The Future With Steve Cunningham

Thank you so much for reading and sharing with a friend. If you are attending Meetups, virtual meetings or whatever you are doing now and you can spread the word about this show, I do appreciate it. We are constantly growing and that is a big thanks to you all for sharing. Thank you so much for doing that and the more that we can do, the more episodes that I can put together for you on these. I’ve got another great episode for you.

A couple of things that we’re going to cover, first of all, in my Duly Noted Segment, I’m going to talk a little bit about my State of The Industry Speech, which is coming up on September 17th through the 18th 2020 at the National Convention for NoteWorthy. It’s going to be virtual and I’ll tell you more about that. The second thing I’m going to do is interview my guest on this episode. His name is Steve Cunningham. He signed up with me for my consulting and education end of April 2020. He has done well. He’s closing his second transaction. He closed his first one already.

All of my clients are getting accelerated results. When they’re ready to go and buy a note, we spend time one-on-one, working with people, me personally working with you over Zoom, looking at all the details of your notes, so you have the full confidence of going into a note safely and as high yielding as possibly. You’ll see that through Steve’s story as well. What an interesting story about how he found this note and what it’s going to lead to in the future. We’ll get in some of the details of this note but we’ll also talk about how that is going to grow into the future. You’re going to find it very interesting and many of you will be able to apply that information as well.

The first thing that we’re going to talk about is in my Duly Noted Segment, I mentioned that I’m going to be doing the State of the Industry Address at NoteWorthy this 2020, this will be the third time that I’m doing that in a row. There are a lot of things that we all need to be paying attention to, in the future for the note business. That’s going to start to impact us probably by the end of 2020 and absolutely into the beginning of 2021. I’m going to do that in my Duly Noted Segment.

In the last show, in my Duly Noted Segment, I talked about the fact that there are note experts and trainers that are all predicting or trying to predict the future. I also mentioned that I think that’s a mistake because we are simply in unprecedented times. To try to say, “Here’s what’s going to happen,” is totally guessing. My theme coming up at the National Convention, which is going to be virtual for NoteWorthy, is going to be to focus on what we do know. Don’t buy into the hype of, “Here’s what we said. This is exactly what’s going to happen. You’re going to need this.” Nobody knows. There are too many things. I talked about that in detail on the last segment that I did in the last episode. You can go back and read that if you would like to so I don’t have to repeat everything on that.

Here is what we do know. First of all, loan modifications, forbearances, foreclosures and bankruptcies will play a role in the future. That’s easy to know. We have over four million people who already have forbearances. That’s a fact and we know that. We can run the numbers on foreclosures which are very low, by the way, but are they going to skyrocket? Are they going to stay the same? That part we don’t know. We do know there are delays and why they’re federally mandated. We know that. How long is that going to continue? We know under the current law. We don’t know if Congress will pass something else. Who knows? Bankruptcies have also, like foreclosures, been very steady over the last many years. Are we going to see a huge uptick or are they going to stay the same? That we don’t know.

Loan modifications, forbearance is a type of loan modification technique, if you will. We know there’s going to be loan modifications, but we also know that people are going to need help with payments and make adjustments. We know that loan modifications and forbearances are absolutely going to play a role in the future. Foreclosures and bankruptcies as well. We simply don’t know the degrees and that’s okay. We don’t have to know the degree to what those things will happen. If we see a huge crash, small crash or something in between if we are prepared.

If we go into this knowing that those are going to play a role, which is an easy deduction to make, because we have numbers on that, then let’s study those things. If we don’t understand loan modifications, if we don’t understand forbearances, let’s understand those. For example, I’ve been telling people for a long-time now since these forbearances started, don’t do what the banks are doing. First, recognize that if you have a seller finance note, you’re not required to do a forbearance. Only the loans that are backed by the federal government, Fannie Mae, Freddie Mac, Ginnie Mae, etc., have to grant forbearances. We don’t, but we can and it’s maybe in our best interest to do that with certain borrowers. Don’t do what the banks are doing, which is zero payments for three months, and then apply again if needed in zero payments for another three months and continue to do that possibly for up to twelve months.

You’re setting a pattern for those people and people operate in patterns. It’s going to be very difficult for banks to come back and get people paying again. They haven’t made a payment in 6 to 12 months. They’re going to try to do anything they can not to make another payment. We can’t operate under those same guidelines. If you’re giving a forbearance to somebody on a seller finance note, have them pay something. Let’s face it, there are a lot of government handouts right now as well. Unemployment, the bonuses, the stimulus. That’s going to be possibly drying up unless Congress can get their act together and start to cooperate and pass some things without special interest on everything else. Let’s focus on that one thing. Who knows, though? We don’t know.

If we’re going to do a forbearance, I’d much rather have somebody if they’re only able to make $300 a month instead of the normal $600, fine. Pay the $300 per month. We’re keeping them in the pattern of paying. Foreclosures, when are we going to be able to start again? When are the courts going to open up? What are the new rules in your local state about foreclosures? A lot of us in the note business, we don’t invest even in our local state. What’s going on in other states? Are they open again? Are they starting? Are there certain things that you can do to advance the foreclosure forward? We need to look into those things. When? Now. This is a great time. If we know these items, let’s focus on them. Let’s sharpen our education on these areas and bankruptcy as well.

You've got to make educated guesses and think of the best-case and worst-case scenarios when doing deals. Click To Tweet

What if somebody declares bankruptcy after coming out of the other end of this? How are you going to handle it? What’s the difference between Chapter 7 and 13? What can you do as a note holder in first position, in second position? Should you look for notes that have declared bankruptcy coming out of all of this? We have time now to do this. We absolutely know because we have the facts on this, that those will play a role. We just don’t know the degree. If you’re prepared, it doesn’t matter what the degree is, you’ll be able to find the opportunity within all of that.

Another actionable step is this. Historically, when bank loans are more challenging to get, seller financing comes in and fills that void. We’ve always seen that and it makes sense. People are still going to need to live somewhere. People still ultimately want to own homes. If they can’t get bank financing, it opens up an opportunity for us to do seller financing. What do we have? We know that banks make very little money on loans under $100,000. They’re restricted under Dodd-Frank. We also know under Dodd-Frank, that banks essentially make zero money on loans under $75,000. Yet, where is the most affordable housing and price ranges? It is in those areas.

If we know that, let’s focus again on this and say, “Let’s look for affordable housing that we can purchase at a deep discount and then offer our own financing or banks wouldn’t do.” It makes sense. That is going to be a big growth area. Banks want to focus on high-end loans and guess what’s happening on property sales and property values? Property sales have been doing fine. You can break it down between existing homes, new homes and everything else, but overall, to a much surprise, property sales have been pretty good, but property prices have been growing. The median home price now nationwide is over $300,000. Most people don’t consider that affordable housing and there are certainly other states in Midwest and Southeast that have houses that are under $100,000.

Manufactured homes are increasing in popularity under $100,000. Where are people going to get the loans? They’re going to get it from smart investors who see the void and understand that seller financing fills that void. Another thing that I’m going to delve into is talking about utilizing and once again, and I go back to my book a year ago. I talked about this in my book, combining the best of real estate techniques with the best of real estate note techniques.

When you do that, you find more opportunity of why you have a bigger skillset. I’ve seen more people buying properties subject to the existing mortgage. I’ve seen more options. I’ve seen more lease options. Why not take those tried and true techniques and add the note factor on there? When you do a lease option, do it with a purchase offer at the end where you’ll finance it for them. If you’re buying a property subject to the existing mortgage, sell it on a wrap. Keep the wrap or sell the wrap. There are a lot of things that real estate investors don’t know because they’re concerned about getting cashed out of real estate. What if I told you, you could create a note and sell it immediately after it’s created if you do it the right way?

Combining these things, understanding and focusing on what we do know, is going to be the best thing in the future, because nobody knows exactly what’s going to happen. We’re in totally unprecedented times. We’re heavily divided politically. We have an election coming up on top of the virus, on top of the unemployment, on top of people looking, “We’ll work at home. Therefore, we don’t have to live in the big city. We’ll move. There are a lot of moving parts.” Nobody knows exactly how it’s going to play out here. If we focus on what we do know and I want this duly noted, sharpen your skills in those areas and that way, no matter what the degree is that we’re facing in the future as far as collapse, etc., we’ll be prepared either way.

Let’s go ahead and move on to our guest. I’m happy to have Steve Cunningham and talk about his story. You’re going to find this interesting. It has so many different ingredients within it. Overcoming negotiations and looking at deals a little bit further than most people might do. Having to prove yourself to get to something in the future and then thinking forward about what you may be able to accomplish all by building relationships in this industry. He has done a great job with that. As I mentioned, I started working with Steve in late April 2020. He’s done very well since then. Steve, thanks for being on.

Kevin, thanks for having me on.

I enjoyed the conversations that we’ve had. We’ve gone into some very deep details on things. Part of that is because of your background. You had a strength in real estate investing and you started looking at notes and that’s how we crossed paths. Is that accurate?

I came from engineering so I’m a thinker brain and but I did venture into the investing realm. I’m doing some flips now, but I would consider myself more of a buy and hold investor. I was attending some meetup groups and I knew a young guy in the notes. He sparked my interest in it. I did some research and listened to a show that you were on. That’s how they got started training and that you had a book out. I got your book, read it and I loved every minute of your book. That’s when I reached out to you to find out more and dive more into the space.

KSS 61 | Building Relationships

Building Relationships: If you’re able to help somebody create a better quality note that you’re ultimately going to buy, you’re essentially showing this person how to create a note.

Your engineering background, as you say, the thought process is a great for analyzing deals, sometimes maybe over analyzing deals. Let’s talk about this particular deal that you found that I think from the very beginning would work out well because I was surprised how you found this contact who might lead into additional business for you in the future. You pretty much did that right off the bat. Give us a little background on that.

I found this particular private note seller on Craigslist in my local market. The way I found him was I was renewing my posts that I’m looking for sellers. I’ll buy their house and creative financing. All that good spiel and it hit me as I was renewing that I haven’t looked at my market to see my competitors’ advertisements. I decided to and I was like, “I should check that out once in a while.” I was looking at it to see who’s all out there. I came across a post that said, “Selling my real estate notes. Call me if you’re interested.” I looked in there and I looked at the stuff and I took down his name and number.

Right next to that same post in Craigslist, I saw an ad about looking for investor to invest in fix and flips. The verbiage in the advertisement looked exactly the same. I opened up that one. Sure enough, it was the same phone number. I got one private seller that’s involved with flips and doing note selling. I call him up primarily in the note stuff and talk to him. We hit it off right off the bat. He also asked, “Do you also do this flip?” I saw this other ad and he goes up, “That’s me, too.” I said, “I’d be also interested in helping you do some flips and maybe we can take it from there.”

I tell people all the time, I said, “Once you start marketing and networking with people, you may end up finding somebody who creates notes on a regular basis like this person.” Never would I have thought it would come through Craigslist. I hadn’t heard the term Craigslist in probably many years, it seems, but you never know. That was interesting to put those two together and see what he does. Essentially, he’s doing one of the models that it’s something I’ve been touching on for quite some time and I did in my book, which is buying properties through one means or another. It could be through note, or it could be through foreclosure, distressed, sales and then papering your way out as a great technique. It sounds like this is what this guy did on a regular basis. You ended up calling him up and talking with them and how did that go?

We hit it off well. He had several notes that he was looking for. He asked me what size of the notes I was looking for. I did tell I’m looking for long-term because I was going to try to use some methods out of your book about buying long and selling short. I said, “If you’ve got any long-term notes, I’m interested.” He says, “The longest I have is like 9 or 10 years. I have several of them that are 3 or 6 years type of thing.” I said, “Send me what you’ve got.” He sent me three of them right off the bat. I was able to make offers on 2 of the 3. On the third one, I told him, “You have some issues in your contract that you have to correct before we’re able to close on this one.” He decided to say, “Before we move forward with our relationship and transactions, let’s see what we can do on these two notes.” We took it from there.

It’s interesting, where you hear that a lot of the same stories again and that’s why I love hearing these things. I’ve heard so many different times and I’ve experienced it myself when I was reaching out to individual note owners. It seems like you’ll find somebody like you did with this person that has a way of doing it. They know the note business, they know that when they sell it, there’s going to be discounts. They’re going to try to test your knowledge of the business, number one and I found a lot of people in that part of the industry because probably they get contacted so much, they almost throw you a challenge to begin with. They don’t give you their best note right up front. They give you something to test your grip on to see if you know what they’re doing because from their end, they’re also looking at you going, “Is this somebody I can rely upon to sell and market my notes too or is this another person who doesn’t know enough about the business? Do you think there was something to that with this gentleman?”

He would not let me pass to do any of flip deals with them, to send me any other notes, unless we close on these couple of transactions. He wanted to see how it goes, he told me upfront that he found out that he could sell the notes. He’s been creating these notes since 2009. He found out that he could sell notes and it sounded he needed some lump sum money to do some flips. That’s how it was. As I made some offers, I did try to put the yield a little bit more in my favor, and he basically told me, “No.” He wasn’t going to give these things away. With a potential long-term relationship that we both saw, he was willing to work with me on a note. I was willing to give up some of the yield to try to get these closed because he kept on telling me that, “I’ll give you better deals if we close these couple of notes and you’ll be the note buyer I’ll go to first.”

It puts you in a precarious position because, yes, you want future business but at the same time, you don’t want to buy something he’s pushing off where it doesn’t fit your guidelines. You had a walk that tightrope of, “Does this make sense enough to move forward or am I putting myself in a bad position and then we ended up not doing business in the future with the guy and he’s unloading something on me here?” You had to go into this cautious, which isn’t a bad thing. You don’t know this person, you met him through the Craigslist.

He doesn’t know you and you’re trying to put something together here. It makes sense to go through cautious but he put a little pressure on you for the yield, which means he knows enough about the business on that. You closed on this first one and I know we had multiple conversations of items. What were some of the first steps that you took? What were some of the first things where you said, “I need to double-check on this or run it by me to get another opinion?” You’re a knowledgeable guy. What were some of the first signs that, “I don’t know if this is the right thing to do or not?”

The first one that he gave me was it only had three years left and it was pretty short-term. I wasn’t sure if that was too short of a note to take on, given a lower yield and everything else. I had some concerns about that. One of the biggest things was, we quickly found out that we can’t get a BPO in the state that we were buying. There are laws against that that only appraisers can do that. I couldn’t find out what the actual price of this building was. As we delve deeper into it, it came out to be a clean note, a clean transaction with no issues. It was probably, one of the simplest notes I could probably do for my first note, and I was willing to take it on from there.

You never really know until you start to talk with some people. Click To Tweet

In that particular state, to clarify for everybody, they require an appraiser’s license and they can only do appraisal so they don’t do exterior BPOs which, most everybody reading this who’s involved in the note business, that’s all you’ve ever ordered was exterior BPOs and it’s based on comparable sales. Somebody goes out there and take some pictures. In this particular state, you can’t do that apparently. We could have probably gone through and got permission from the person living in the property to have the appraiser come out and go through the property and everything else, but it’s putting a lot of pieces together on something like that. It can slow things down, inconvenience, your potential note sellers going, “The value is there.” This one also was backed by an apartment, a complex almost. It has a number of units in this apartment complex and being stated he made so many payments on this loan and having only three years left, it had good seasoning on it. I think that made you comfortable enough.

One of the other things to your point was that he has a lot of the documents, but they’re in a folder in his file cabinet at home. When I asked him, “Can you show me proof of payment history? Can you show me proof of all these other documents that I’m requiring?” He couldn’t do it. He doesn’t know how to work a computer very well. It took me 1.5 hours to explain how to scan one document and we gave up on that. The best thing that we found that he could do for me was he knows how to use his iPhone very well. He took pictures of everything. He texted me, all the pictures and I had to reassemble everything together.

I’ve requested the last six months of payments that they’re making. One of the interesting things about this that caught me off guard and I reached out to you on was he told me while there are only three years left on this note, and there’s no interest. I didn’t push back on it. I didn’t think nothing of it. My thought was, three years off maybe it’s mostly principal and the interest portion of that was low. No, he literally meant there’s no interest. He created a note for zero interest and principal only payments for the past nine years. That’s the reason why, is I had to negotiate from going a zero interest, now all the way up to about 8.5% yield on this note where he had to take a bigger discount. I tried to explain that to him of why I’m asking what I’m asking for.

Everybody, when you’re reading, this stuff happens with the smaller investors. They have a certain way of doing things but they’re not great at recordkeeping. It sounds like this guy’s great at dealmaking but not great at recordkeeping. He has everything, but he’s not into the technology. He is into putting deals together. You do have to take additional steps if you want to make these deals work and that’s great what you did to try to work with him, “That didn’t work. Maybe you can send me this and that to work through.” Those were some of the challenges. It’s easy stuff. Getting the documents but explaining the discount to him was a little bit different because it tied into, if I remember correctly, payment history as well. As you were saying, he didn’t have clear documentation other than sending you deposits or something like that. Was that right?

Canceled checks. I asked for bank statements because he’s heavily involved with doing a lot of flips. I haven’t asked him but he sounds like he’s a general contractor for the past several years. He was explaining to me that whenever he gets a check, he ends up not necessarily cashing the entire check into his bank account. He ends up only depositing a certain amount because he’ll pay off his contractors’ part of that check. All he could show me were pictures of his checks that he received from the borrower and I took as good.

Sometimes that’s what you have to do. You’ve got to take educated guesses and think of best case and worst case scenario there. You overcame the hurdle of getting the documentation. You overcame the value of the property because we figured, if they’re renting that place out, there’s more than enough money coming in to pay the note that was satisfactory. You can almost do an income approach with what that property was worth. As you progressed through this deal, eventually, you negotiated a price that he was happy with and that you are happy with. It started to move towards, “How do we get this closed?”

He was happy to hear that we probably would be able to close within ten days. I put that in my contract that we can close within ten days and he had a condition that I pay all closing costs. Going into this, I was like, “In talking with you, there shouldn’t be much of any closing costs at all, except maybe a lawyer fee to do the escrow transaction.” That’s what I was figuring on was. He gave me a couple of his lawyers that he uses. I called them, one lawyer turned me down, says “No. We don’t have time to do something like this.” The other lawyer says, “We don’t know how to do it, but this sounds interesting. We’d love to take it on.”

I followed up with that second lawyer. I made it easy for him. I said, “It is just an assignment of a mortgage and a note and that’s it.” Things of that nature. What I also overlooked was this is a land contract. He does all of his deals on land contracts. I was going in this thinking, “I’ll just assign the mortgage and assign the note,” being this is my first transaction. When I requested since I said I’m paying all closing costs, “Please provide me an invoice of how much this is all going to cost me so I can factor it in my costs.” I told her this is a cost-sensitive transaction. “I’m taking a hit in my yield to do more deals with this guy in the future.”

A couple of thousand bucks changes your yield dramatically.

She says, “My fee is $500 plus you’ll pay deed stamps and transfer taxes.” Being in the real estate industry, that tells me that it could be thousands of dollars because usually, where I’m from, a deed stamp is related to either the tax assessed value or the sale price or whichever is higher. I pushed back and said, “This is a note transaction. Are you sure this is correct?” It turned out and after talking with you, is that yes, because of the land contract, a deed has to transfer into my name and that transfer will trigger these deed stamps. It was going to be based upon the price I was going to pay for the note. It was certain to kill the transaction because I had some higher costs in the title report because as you mentioned, this is a twenty-unit apartment building.

KSS 61 | Building Relationships

Building Relationships: The  devil’s in the details. You can know how to do things on the highest service level, but when you actually go through these transactions, it’s these little hidden issues that pop up.


When I pulled the title report, it’s a commercial search and apparently, that’s a lot higher price. I spent about 2 to 3 times more doing that search than I normally would on a residential so I had extra costs there and the transfer taxes is going to cost another $450. I went back to the seller and I said, “Because it’s a land contract, there are some deed stamps. I know I told you I’d pay all closing costs, but this was unforeseen for me. If we can close this thing within the next five days, would you be willing to pay the transfer taxes?” He asked how much they were and he said, “Sure. No problem.” We took it from there.

I do remember we had the conversation too of saying, “Put down the usual.” For the readers that have a little bit more experience, a lot of times when you’re transferring stuff like this, it’s done through quitclaim deed and many quitclaim deeds you look at those $10 as a transfer fee or $100. People do that because the stamps are based upon that amount. We even said this. We run it by the attorney, but I think the attorney is going to come back, which they did, ultimately and said, “We’re not comfortable doing that. We’re not comfortable putting $10 on there.” I get that too. That puts it in a difficult spot. He agreed to pay those not on the first phone call though, right?

No, it wasn’t the first phone call because I was thinking I would potentially eat this on this deal to close this and get more deals. I called him up first. I said, “On this next note that we’re looking to close, would you pay those?” He agreed because I did say, “I love to work with you. I’m going to try. We can create these notes a little differently. Maybe in the state, they use deeds of trusts. If we do that, we’d be able to potentially avoid issues like this in the future and make things a lot cleaner.”

Not only were you concerned about the recording stamps going into the deal, you had gone back again to the engineering type of thinking. You thought the whole process through and say, “Three years down the road, I’ve got to now transfer that deed to the now owner of that apartment building, and what’s that going to cost?”

I posed that question to the lawyer and says, “If we’re putting the consideration of what I’m paying for the notes right now and those stamps are based on that, what is the consideration when I have to deliver the deed to the borrower?” I could tell from their responses, they didn’t know, but they suggested that it should be the original price that the borrower agreed to pay when they bought the property in 2009 and that would be $315,000. That’s going to cost me about $1,300 to transfer this and I said, “This doesn’t seem right.” I asked her a few questions. She did come back with me and says, “What you can do is mail them the deed when they paid off and have them record it. When they record it, they’ll get slapped with the fee.” That’s what I plan on doing. Otherwise, that’s going to kill my ego pretty bad.

That’ll work too because you’re responsible to deliver the deed which you did. You’re not responsible to record it. That’ll end up working out fine with that. I think that’s all the stumbling blocks. If there’s something else, make sure you jump in there. Some people might be thinking because you’ve heard me preach this before to my readers, as well as you, Steve, that I always talk in terms of when you’re hiring attorneys in this business, hire specialists, because not all real estate attorneys know our space. This story illustrates that, but again, you’re in a situation where this gentleman who’s selling this note to you is comfortable with these attorneys and these attorneys helped him create these notes. Am I correct on that?

Not on these particular notes, but he is using attorneys to close those transactions in the fix and flips as well as when he creates the note, he doesn’t get them to an attorney. He’s using attorneys where the notes are created. He lives about 2.5 hours away from where he’s creating these notes and doing these flips. The attorney that we use is in his hometown.

He had trade that off. We did look for a specialist in that state now that I recall, and we couldn’t find one there. We ended with this attorney, but at least they were up front saying, “We’re not very experienced in this, but we’ll do the documents.” They got it closed.

I asked her, “How was this transaction after we closed?” She’s like, “This is one of the easiest transactions I did.” She was happy with it. I reached out to her because I did sign up the other deal with the seller to close this other one. I tried to reach out to her to see if she’d be willing to close this one too. This one in my contract, I do state that we’re going to split the lawyer fees 50/50 this time around and the seller will pay the transfer tax if it’s in the land contract.

Its lessons learned and moving forward, you modify these deals. In fact, we even talked about let’s start looking at land trust and personal property trust and things like that to overcome this minor enough obstacle of transferring and transfer fees and such. It could be a great way to do that even further with this gentleman and even I foresee you helping this guy create better quality notes quite frankly too. Do you think that will happen?

When we can make great notes better, then we create a very high-quality note that we could sell. Click To Tweet

Definitely. He’s already claimed I’ve taught him a lot about this space of what is required, especially what do you want to sell the notes for. He’s creating his notes on very low interest. He’s doing good service to all these people that can’t qualify for bank, but he’s leaving a lot of money in a tank top on him. He could raise his interest rate up and make his note much more marketable to sell it. He’s learning pretty fast. I’m going to help him with that. He loves the idea. He keeps on bringing it up that he wants to work with me a lot more in these. He wants to do some flips. We might have some business together and hopefully, we can maybe bring some notes out into the marketplace to other people that I foresee, but there’s a lot of business and whenever we talk, we enjoy each other’s conversation. We try to avoid calling each other because we end up talking for at least 30 minutes. We are both busy and we converse through text most of the time until we need something.

Imagine this, everybody, if you’re able to help somebody create a better quality note that you’re ultimately going to buy, you’re essentially showing this person how to create a note and you’re already talking about, “Here’s how much I’ll pay for it if you create it this way. If you create it that way, I can only pay this.” It puts you in that power position. Ultimately, it’s going to get you to that goal that you set in the beginning which was to buy long and sell short.

You weren’t able to do it on this first one because there are three years of payments left. Moving forward with this person, helping them create in the right way, create them with enough terms where you already know ahead of time, “I can get this note locked up at this price and I can sell the first X number of payments for this price to another investor who will also be happy.” Now, you’re writing your own tickets. You’re turning that money from one deal to another with this guy and you’re setting up an entire system. If we envelop which I’m sure we will, I’ll be working with you on this and getting these all set up through the trust. That will make it much easier to facilitate all these types of deals and you’ll have a good run with this.

I’m looking forward to it. He’s looking forward to it. That’s one of the first things that comes out of his mouth when we are talking. He goes, “We’re on the same wavelength. We think alike around this investment strategy.” He’s not very good with paperwork. I look at him as he’s an action taker. He’s finding deals. He brought me six deals that he wants to flip and I told him, “I can only do a couple of them with you. I don’t have all the funds, especially if I’m buying these notes.” He’s like, “Let’s go look at all these together, we’ll pick the best ones, and we’ll do a deal that way.” He’s given me first right of refusal and all this stuff. He wants to make a business and a long-term relationship with this and I’m all for it. I hope it works out.

It sounds like it’s heading in that direction for sure. Readers, letting people know what you do, all the time. You never ever know who you’re going to run into. It might be on Craigslist, it might be on an elevator, it might be at the beach, it might be having lunch somewhere. You never know until you start to talk with some people. That’s what you did and look what it’s already led to. Are you closing the next one?

I’m hoping to. I got the title report back. It’s a lot more involved. I look at the one we closed and that was easy. It was clean notes, no liens, there’s nothing there. That was only a twenty-page long, including all the contracts and all of that. Here, I’m looking at 74 pages of title history, because there was a tax lien sale and then other issues. It was sold to an investor and back to the seller and he then bought it. It’s a lot more involved and I’m sure I’ll have a conversation with you about it because I’m seeing some potential. This one’s a lot riskier.

I look forward to having another conversation with you. For those who are reading and maybe not be in my consulting program, how useful all those sessions that we do? What I’m talking about is I do one-on-one personal sessions with people, me and myself. I don’t outsource that. We go through deals, we go through issues, and we dig deep into whatever it is that we need to look at in deals to protect you, but also maximize your returns as best we can. Do you find those very helpful?

It’s very helpful. You’ve been very gracious with your time. You let me schedule one-on-ones with you on your calendar whenever I need to. You’re not limiting anything. I feel like I have full access to you whenever I ask all my questions, because I find in any type of business and all these training materials that the devil is in the details of some of the stuff. It’s like you know how to do things on the highest surface level, but when you go through these transactions, there are these little hidden issues that pop up and you’re not sure how to handle them. If you’re getting that this is becoming riskier and then maybe you should eject out of it. Talking these things through with someone with your level of experience, it makes me feel a lot better of continuing on with this transaction. Your expertise and time have been super valuable for me.

I tell people all the time, it’s one thing to learn the business and see case studies, but it literally changes when you’re putting your money up now. That’s what all those, “Am I missing anything? What about this? What could happen here?” That’s what happens to a lot of people and they freeze up. It’s my pleasure to work with people and identify those things and say, “Yes, you’re okay. No, I wouldn’t do it.” I’ve had to do that with other people as well. I appreciate your comments there as well. If we’ve got the readers and they want to do some similar transactions with you, where can they reach you?

I do have a website it’s called PragmaRealty.com. It’s more for sellers. They’re looking to sell their property on creative terms. I don’t have a note investing website but otherwise, they can reach me through that website or they can reach me at Steve@PragmaRealty.com.

KSS 61 | Building Relationships

Building Relationships: It’s one thing to learn the business and see case studies, but it literally changes when you’re putting your money up.


If you have notes you are looking to sell or you have real estate, you’re looking to create notes with, Steve is a great and knowledgeable guy. He knows how to do this the right way and he is a take action guy. Are you doing this full-time?

Basically, yes. However, I’m running out of money because this seller that I’m working with wants me to buy them for myself. When I tried to tell him, “Would you be okay if I broker some of these and we can do more deals?” He seems to be okay, but he wants me to buy it. Hopefully, when we create notes to get together, that we create a very high-quality note that we could sell it right away at the closing to a potential note buyer to people. That’s what table funding in your book that you call it or a two-note solution. I’m hoping to go down that path with this particular sale.

We will definitely make that happen. We’ll create notes where you’re in it, but you also have a financial partner, doesn’t necessarily mean that you’re selling the note directly to somebody else. That’ll be our next phase. We’ll get that accomplished. Steve, thank you so much for taking time to do this with me. I do appreciate it.

Thanks for having me on. I greatly appreciate all the work that you’ve been doing.

Thank you, everybody, for reading. Make sure you sign up. It’s $25 for the NoteWorthy Virtual Summit. Go check it out, AttendNoteWorthy.com and they’re a good sponsor of mine on this show as well. Tell a friend and I’ll have another episode for you as soon as I possibly can.

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About Steve Cunningham

KSS 61 | Building RelationshipsSteve spent 14-years in Corporate America solving problems as an electrical engineer designing circuit boards for medical diagnostic imaging equipment along with cutting edge electronics for commercial power tools. Originally from Wisconsin, my wife and I moved to Northern Virginia in 2016 to focus-on and grow her career. Since then, I’ve decided to leave the engineering field to pursue a career around real estate.

I decided to get my real estate license in 2018 but quickly realized that traditional sellers and buyers didn’t really need a problem solver. They only needed someone to help market property, search for a property, and assist with the confusing paperwork. I’m an engineer, a so-called “thinker-brain”, and if there isn’t a real problem to be solved, then what separates me from the thousands of Realtors out there competing to get your listing…my smile…my charisma? I’m wired to solve problems and design creative solutions. That’s why I’ll never offer to list your house, I’ll only offer to buy it.

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