GDNIP Ep 26: Setting Up An “If I Die” Folder

At some point in our lives, our concerns slowly start to shift. We do different things at different phases as we begin to become more future-minded, anticipating what will happen next and asking whether or not we are prepared for them. For those of us who are handling our own businesses, we may have thought about what would happen in the future if we are to suddenly go away. Who would take care of the things we leave behind? Will somebody be able to find the master key to our “If I Die” folder? Gail and Chris explore this conversation as they talk about securing your notes and making sure you have a plan where everything is in a certain spot.

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Gail Anthony Greenberg & Chris Seveney Setting Up An “If I Die” Folder

Setting Up An “If I Die” Folder

We have a lot to cover and I know you’re eager to jump in. I’ve got a big trip because a long-held dream of mine to own a second home in an exciting Southern city has come true. You know how they always say to buy the worst house on the best block, I have the worst house in probably a five-square-mile area. There’s some question about how long it will keep standing in its current condition. All I can say is although I root for all my borrowers to reinstate and stay on track, I am thanking my lucky stars that these borrowers moved out. They were in danger.

I hope you have a wonderful trip as you go. When you’ve got a lot of exciting plans, you’re going to take with that property as well.

I’ve got a major renovation plan. I’m going to meet with contractors, bankers and all kinds of people. Luckily, the flea people have already come and gone. They’ve scorched the Earth.

What just happened now which you’re not aware of this, but when I checked, we have surpassed 5,000 listens to the podcast.

Thank you for your dedication and perseverance.

We’d like to thank you, our audience, for staying with us as we continue on our journey. If you have ideas or topics for the show, please reach out to us. I actually had an investor reach out to me that wanted to talk a little bit more about how to put a calculator together, which is probably going to have to be a webinar versus a podcast episode. The most questions I’ve been getting asked have been since the turn of the year about taxes and bookkeeping, how do you do your books if it’s based on a cash or accrual system and all these technical terms?

I’m in a tortoise and hare situation. I posted some questions about 1099, which have to be sent to both vendors and investor JVs and talk about kicking a hornet’s nest. I set off a panic in the note world.

We’re looking possibly to have a bookkeeper come on to the show, probably on our open mic that we have and talk about the top five things she sees people do wrong and have an open Q&A. That would be very helpful for everyone out there.

We should mention too that if you do have show ideas, coming on to the open mic is a great way to connect with us and put up a flag and see if anyone salutes.

I’ll let you introduce this topic because you were excited when you came up with it.

If I Die: You’re in more danger driving in your own neighborhood than you are flying somewhere.

I’m about to go away in my pre-real estate life. At different phases of your life, you have different concerns, different things you have to do, little routines before you go away. When you have little kids, you have to let the teachers know if they’re missing school. You have to get somebody to watch the dog. You have to stop the paper. These are the little things and you pack. For business trips, if you’re a spouse isn’t going with you, which my husband never does on business trips, we tag team. We’ve always got coverage at home with the kids, the dogs, and everything. Packing for a business trip was never a big deal. You have clothes, computer and phone charger, we could all do it in our sleep after all the things we’ve done.

Something happened when I became a note investor. When I was a flipper or I was managing student rentals, I almost always had a partner who knew as much about my work and the projects as I did. As a note investor, I now own ten times as many things simultaneously. There’s stuff going on. I have two IRAs that each have notes. Some of those notes or CFDs have become REOs, there are houses that I own. Some of them are getting renovated, others are sitting and waiting for me to pay attention to them. I also have many JVs and many JV deals. It occurred to me pretty early in my note career when I was going somewhere, I’m always thinking about the catastrophic thing that could happen, “What if I don’t come back? What if something happens?” I thought, “If I didn’t come back, no one would be able to unravel my note collection. They would have no idea.”

When you refer to not coming back, I view that as you going somewhere hitting the lottery, collecting all those money, going out of beach somewhere saying, “I am never touching another note again or dealing with a borrower. I’m on my beach relaxing.”

You and I are both nervous flyers. We think about, “What if the plane goes down?” In reality, even if you’re not going anywhere, we know statistically you’re in more danger driving in your own neighborhood than you are flying somewhere. Although, this is something that was prompted by fears of flying and what would happen to my poor notes and JVs if the plane did have a problem. It’s something any everybody should do pretty much, as soon as you can. This is funny, this goes beyond notes. I have had elderly relatives pass away within the last twenty years. Years ago, it was pretty easy to figure out where their bank accounts, whether they had a stock account, where all their stuff was. Everybody got mailed statements back then, but that’s not true anymore. I have paperless everything. My computer is the master key that unlocks every account number, every password, and everything. There are layers of preparation and communication you have to leave behind, for anyone to have even a prayer of dealing with all of your stuff. This is what it came down with me. I have a fireproof safe that has my personal papers in it. In there is a folder called I’m Not Kidding If I Die.

Nobody can get to it because nobody knows the password to the safe.

You’ve got to give it a little bit of difficulty or they won’t appreciate it when they find it. I thought, “I can’t name it anything. It got to look crystal clear to my grieving relatives that this is where they go.” In that folder is a master letter that I update every time I’m about to go somewhere. I was doing it and that’s what gave me the idea to do this. First of all, I have a password program on my computer but of course, if my computer is with me, that isn’t going to help anyone.

Use LastPass or one of those programs.

I use RoboForm. RoboForm syncs to a cloud-based, giant password in the sky. There are a lot of them. The important thing is to have one. Since my computer will be with me in the fiery wreckage, we bought a small computer that all it has on it is RoboForm and a few other things. I wouldn’t lose the file anyway because it is cloud-based but I feel like the easier I can make it on my relatives, the more chance that they’ll actually be able to do this.

It’s interesting because I don’t know if people have seen in the news what happened up in Canada, where there was a guy who had a digital wallet or something. He had $190 million in accounts, he died and there was no password, nobody can break the password. They’re basically saying, “Your money’s gone.” I don’t know who gets it and so forth. It’s in the cloud somewhere but you’re not getting it back just because you didn’t give anyone else a password.

It’s the same with blockchain because there’s no customer service department because it’s all out there. Someone should make his heirs make that like a giant hacker convention where everybody, whoever figures it out gets a piece of the action. How many video games would that buy hackers, they’d be so into that?

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The moral is, especially for note investors who work independently or anyone that works independently, make sure you have a plan where everything is in a certain spot. Somebody can go ahead and find it, especially if you’re dealing with other people’s money and JV partners as well.

You have an If I Die folder and you have to call it that because no one will understand anything else. That started for me with the thought of, “I’ve got all these JVs and all these JV deals. What happens if something happens to me?” The first thing I did was I found a guardian for my notes. My children are grown, no one has to take care of them and be their parents, but my notes are little babies and they need a guardian. You’re my guardian, Chris.

Thank you, Gail. I returned the favor to you.

You told me what a problem it’s going to be if anything happens to you because you’ve got a lot going on.

What’s interesting is you had me sign an official form and everything like that and so forth. For me, what I did is as part of my estate planning, which my wife and I are in the process of doing, one of the things we put in there was some provision that, if something were to happen then basically my wife or the whoever was managing the estate would seek your council to manage and take these over.

Obviously, we’re going to work very hard to make sure this plan never gets triggered. I’ve already told you to stop making videos while you’re driving.

I’m not driving anymore when I do those videos. I do hold it but I’m sitting in my driveway and it looks like I’m driving because cars might be going by me or whatnot. I moved the camera a little bit or my phone but I’m actually not driving. One thing that has me overcoming my fear of flying a little bit was on my YouTube, a video popped up about how they test airplanes. They were testing a Boeing 747. There are test pilots out there who tests these planes. One of them, they were taking off and dragging the tail of the plane against the runway while they’re trying to take off and I’m like, “Okay.” I’m thinking, “How does this guy have on life insurance?” There are certain pilots that do this. The one I thought was nuts is they take these planes up to 20,000 feet and they intentionally put it in a stall to see how the plane comes out of a stall.

They shut basically the engines off and then they do something with the wings to have it, so the wings are fluttering or something happens. They just dropped the plane and they do all these things to test airplanes and I’m thinking, “This isn’t testing something on a building where you have fall protection below you.” If it doesn’t work, you’re in a little bit of trouble. I’m sitting there thinking, “You’ve got to trust the engineers and guys who built this thing to start doing that.” The guy has been testing airplanes for 30-something years. Tests have all been successful from what I can imagine.

I actually from my voracious reading on the subject that planes can go through a lot and still be fine, but you never think that. For me, they seem the most fragile things imaginable. I don’t even understand how they stay in the air truly, but I know the physics is behind it. It doesn’t make a lot of sense. When you look at them big and heavy, “How do they get up?” I don’t know. I’ve decided to be philosophical and now that I have my, If I Die folder, at least that part of the panic I would experience that’s about like, “No one’s going to know what to do.” I don’t have that piece anymore. It’s like I don’t want it to hurt, I have a drink and it will be fine and smooth sailing.

I’ll tag along into the one that I had, which plays a little bit of role in that. If something happens to you, who’s to say who owes what to whom and so forth sometimes. One of the things that I do on my deals that I don’t know anybody else that does this and this is something everyone should be doing, when you close out a deal you have a JV agreement to start to deal, you need to close out the deal. There should be a waiver and release form that says, “You’re paid in the amount of X and this deal is basically closed.” That way, there’s no question six months later, a year later or God forbid something happened to you. You paid somebody off, who’s to say somebody came back and says, “He still owe me $5,000 or $10,000.” Your books will be there, but it would take a long time to try and figure it out. The simple thing is to keep your files organized. When you start a deal, in the same folder, I have my agreement. I also have a waiver right next to it. It says it started, it closed and I also put it in Infusionsoft and all these other things but it’s a signed document that is there.

If I Die: Make sure your paperwork is in order because that’s the thing that is going to get you in trouble in the business more than anything.

I deposited $25,000 into your bank account for your 401(k), you’re working one up for me. You have this special waiver form and you’re going to sign one and send it to me.

That’s something that for people out there as you start to grow your business and stuff, you need to treat it like a business. Make sure your paperwork is in order because that’s the thing that is going to get you in trouble in this business more than anything is not how you manage things, how was your paperwork and how is it in order?

I’m going to circle back to my If I Die folder because I would love to tell you a little bit about what is in here. I created a master letter and it’s dated at the top, so they know how recently. It’s always dated the day before I go. Here’s what’s on it, the first item is the password to my computer. Believe it or not, even long-married couples like myself don’t necessarily know the password to open each other’s computer. I know your wife was having trouble opening your QuickBooks. You’re hiding the real passwords from her clearly on certain things. You’ll have to think about whether you’re going to tell her the real one in your If I Die folder.

That was actually my accountant who couldn’t open the file. We both share the same passwords.

The next item is on both computers, it’s a description of how to get into RoboForm where you can access all of my passwords. I state clearly I’m not giving any passwords in here because they’re all in there. Then I list all the bank and investment accounts and it is surprising how many there are because I have two IRAs. They each have a bank account. I have personal bank accounts, I have a brokerage account in my name. I have an account that I share with my daughter, which is not a problem because that would go to her in the event that I’m not around. I have multiple checking accounts for my business LLC. I can’t explain why. I have one that is for my business, which is the Aubrey Group. I have another Aubrey Group that is where I pay myself. I pay my expenses of that one so they don’t get mixed in with my JV deal, bank account transactions. You get referenced very early on, Chris. For questions on how to do anything with my IRAs, ask Chris. I’m already setting you up as the expert on that. Here is the contact information of the attorney who set up my checkbook IRA. That’s for you, Chris, you have that guy’s contact information.

Then I mentioned my two lending club accounts, which have almost nothing in them anymore because I pilfered all the money to put it somewhere else. There’s a paragraph that’s all about how great you are and I had you sign a form. That form was actually a power of attorney that you can use with all the banks and anybody else that will require that for you to do my business for me. Your contact information is there. I tell them pointlessly because they’re not going to do anything about this which servicing companies, my notes are at and that’s for you. Where on my computer the information about each deal I have is. Basically, I have several folders that have subfolders that are all by the address of the notes that I have. For Chris’s benefit, I have the contact information for all of my JVs. That’s the first page, front, and back. Isn’t this the most loving thing you can do for your relatives?

I’m wondering if there’s a way we can post that to the notes, put dummy names and dummy information stuff in there.

That’s a good idea. I will if I can dummy it up. I’ll redact it, it will be all black bars and then here and there will be stuff like a couple of words. I also mentioned deals that I’m in that are being run by other people and their contact information. I say my computer gets backed up to the cloud by this company. This is how you find any files in case. Obviously, if my computer went with me, you’re not going to be able to have any files unless you go to the online backup and get them. There’s how to do that. I tell them that the QuickBooks file is also downloadable from the cloud. I have a safe deposit box and there are a bunch of collateral files in it. There’s information about my rental in Indiana and my property manager’s contact information. There are a few note specific things about what’s going on. I have individual things that are in process. I’m renovating this house that is in my IRA, here’s the realtor, here’s his phone number. He thinks it will go for this amount. The money to finish the renovation is here, you’ve got to do that.

There’s a part about the house I got that I’m about to renovate. I realize that I will not be around to be disappointed if they don’t continue with the renovation. I have put so much into this and this is so big to me. I told them that if they don’t finish this renovation, I will haunt them for the rest of their lives until they finish it. I gave them the contractor’s information, the floor plan is there and the architect’s drawing. There is no excuse. They need to finish it because my husband and I were having this whole thing. I found out he was paying for a very expensive life insurance policy and his entire reason was he expects to die first. He’s a lot more optimistic than I am. I feel like I’m the one on the block. He wants our kids to get something right away and not have to wait for me to go because my family is long-lived. It can be a long wait for them. I wanted them to have. He took out a $250,000 insurance policy, which wouldn’t normally be expensive but my husband is 72 years old.

It’s like a $4,000 a year policy on life. That’s crazy. We need to take some of your IRA money and start buying stuff for them, rentals. The thing about this house that we’re about to renovate, is that it’s in an Airbnb hotspot. Once we go through this renovation process, that thing will be printing money for decades to come. I’m going to be so mad from beyond the grave if they give it up or they don’t finish it. I have a son who’s in real estate, although he’s not a flipper this should be well within his ability to manage this. I’m going to make them all swear. I’ll probably call them and make them all swear an oath. It took me a lifetime to get here, don’t you dare give it up. There’s a little bit of stuff about my funeral. I won’t bore you with the details.

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Do you have a trust or is everything, house, stuff in your name and everything like that?

My house is in my name. I’ve actually been curious when you have a mortgage, how the bank can use it if you put it into a trust. Do they even know, do they get notified?

We’ve done that. We did a trust and everything that you’re doing is part also of the stuff they ask you to do, as part of your trust. The mortgage company does get notified but they’re not going to balk at it. It’s in estate planning. You’re still responsible and liable for the house and things like that. It’s more just you don’t have to worry about probate is one of the main benefits of having a trust.

My parents’ stuff was in the trust, except for like a car and it was awesome.

I was shocked because I had been talking to some people in my area of getting one done. The numbers I was getting quoted were astronomical. A referral of somebody who we both use, Mark Kohler and Associates, KKOS. I know Cody Cox uses, Dan Zitofsky uses and a lot of people highly recommended them. I talked to them. For them to set up the trust is actually very affordable and they also will record your deeds for you. You have to pay the deed fee but to change the name of your property, they do for you. They make it very simple for you. I was like, “This is a great process.”

What do they charge for that?

They have two plans. Depending on a number of properties you have, one of them I think is $1,200 and the other one is $1,800. I was getting quotes of three to four times that for people in my area. Also where I’m located, I’m used to seeing attorneys charge between $400 and $600 an hour in the Washington, DC area. We’ve got a few attorneys that’s the going rate but you go an hour from DC and you’re back to reality where you’re at $250 an hour.

You and I have that in common. Philadelphia is obviously a lot cheaper than DC, but in general on the East Coast, when I tell people about the prices of things in Indiana and the Midwest like Mark Kohler’s in Utah. He’s pretty affordable to outside of the recreation areas. It’s refreshing to get some affordable prices on things like that.

I actually got an email from him and I am going to sign up for this. It’s $99 and it’s asset protection where they assist you with doing your yearly minutes and all that stuff for keeping your LLC compliant for asset protection. I know there are different other companies that do it.

Doesn’t someone else charge upwards of $500 a year for that?

Yes.

If I Die: One of the main benefits of having a trust is you don’t have to worry about probate.

$1,000 at the beginning.

I’ve used that company and they’re great to work with. They every month call me and hound me to make sure I give them all the information and stuff like that. I don’t know if Mark does, I doubt they do the same thing. It’s probably less service but literally, here are the forms or whatnot. I’m like, “For $99, I’m probably going to try it to see what it’s like.” It seems short money to do one of those things that nobody does that you should do.

I feel like this whole podcast is this stuff that nobody wants to do. First of all, it’s depressing to think about the idea that something could happen. It looks like so much work. I would recommend start making lists of things, where your bank accounts are. Do one thing a day, put a password program on your computer. If you travel with that computer, go buy a little cheap laptop that you can put the same password program on. If you’re not already backing up your computer regularly, you are a steward of other people’s money, you’re running a business, shame on you that’s all I can say.

It’s the stuff nobody wants to do because you’re not getting paid to do it. Your company’s not making money to do it but what it is doing is you’re putting an insurance policy against your company to protect that later on down the line from potential losses or a lot of mass confusion.

Its part of the trust relationship that you have with your JV is that you have a plan, if something happens. It’s a sad reality that things can happen and you have to be ready for whatever comes down the pipe.

You’re right and you’ve got to find somebody you trust in this business of, “Who’s going to take care of these for me?” I know there are a lot of note investors out there and this isn’t something like a fix and flip or something like that or a rental property where you can go say, “It’s a rental property. No big deal.” These are actively need to manage high maintenance type of situations where you look at from perspective of if you’ve got 30, 40 notes. That’s like having 30 or 40 renovation projects going on at once. Where are they at? How much do you owe each vendor, who’s got to get paid what?

What’s the status and are the attorneys working on this? I’ve got six attorneys in different places doing different things. You have to be able to recapture all that. I know we had a thought that we would do multiple topics in this, but I feel like we’ve already given everybody almost too much to think about.

We touched upon and focused on a topic that I think we should end on that note. Give people food for thought on that and start doing business planning which is part of your business and planning.

On to Notes and Bolts and I have one that is a very happy Note and Bolt hat I never thought about. I have applied for financing to do this big giant renovation on this house. I filled out a personal financial statement and of course, they ask about retirement accounts. It used to be a lot easier to talk about those when I had brokerage accounts. I ended up attaching a spreadsheet showing all my holdings, the UPBs. The fair market values, the UPB’s status and they actually had a thing on there for receivables. I figure our notes are nothing but a big giant pile of receivables. The thing about being in our business, I never thought about this before. Your net worth when you are a note investor in terms of this questionnaire can pretty much explode overnight. We’re not telling them what we have paid for it.

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That’s not what they’re asking. When we pay so little for houses that are worth so much more and investments are worth so much more, it’s crazy. I feel like I doubled my net worth in two years in this specific term. The reality that you and I know is not that easy to collect everything that’s owed. There are going to be expenses involved. What a proud and delightful experience filling this out for the first time in my life. I always felt like they’d be judging me and finding me lacking and I’m like, “You would be lucky to loan me money. Look at this.”

Here’s something I’ll ask everyone out there, what is another business you can be involved in where you can basically make an investment with no money and reap so much benefit and reward? I know there’s Amazon drop shipping and some things like that and so forth. There is a potential idea but there are so many people that do that compared to how many note investors are there? I still believe this is a very small community for people who do it as a business, would you agree?

On paper, there are quite a few people who are interested in note investing but I don’t think everyone has found their way into a regular routine with it yet. It will never be like flipping is or owning rentals. It’s never going to be that big, I’m convinced.

Thank you for the support you’ve given us. I hope you continue to read our blogs and join us on our journey. Hopefully, we can give you insight so you can start or continue on your journey. As always, we hope you can go out and do some good deeds.

You can sign up for the upcoming Q&A. That’s our regular open mic. You can always sign up for the next one by going to 7EInvestments.com/podcastwebinar.

We hope to see you in the next episode. Make sure to leave us a review on iTunes, Stitcher, as well as join our Facebook pages. We have one called Notes and Bolts, where we discuss a lot about contract for deeds. We have one for the podcast as well, where you can listen and comment on episodes.

Leave us reviews and I will send you a copy of my If I Die file.

Thank you all.