All Forum Posts by: Ryan Snelson

Tyler, I just started my own thread with my experience investing with Scott Carson.

https://www.biggerpockets.com/forums/79/topics/758907-is-scott-carson-weclosenotes-inverse-asset-defrauding-investors

I feel like the investor side of the Story has been been told. I would love to hear Scott's side if you can get it. I'll go on your podcast if that is what it takes. Although from my experience, I wouldn't hold your breath waiting for Scott Carson to do something he said he would do...

Tyler,  I just started my own thread with my experience investing with Scott Carson. 

https://www.biggerpockets.com/forums/79/topics/758907-is-scott-carson-weclosenotes-inverse-asset-defrauding-investors

I feel like the investor side of the Story has been been told.  I would love to hear Scott's side if you can get it.  I'll go on your podcast if that is what it takes.  Although from my experience, I wouldn't hold your breath waiting for Scott Carson to do something he said he would do...

Like many others, I have had a negative experience Joint Venture investing with Scott Carson and his company Inverse Asset Fund LLC. I'll share my experience in the hopes that it will help others who are thinking of or currently invested with him. I decided to invest with Scott Carson after attending a few of his NoteCamp online courses and taking his Virtual Note Buying for Dummies course. I thought those programs provided pretty good value and that Scott seemed genuinely concerned with helping people get started in the Non Performing Note (NPN) space. I successfully invested in a couple of NPNs on my own using many of the people he recommended so it seemed that his method had potential to be successful. At the time I was busy with my main business working with tax foreclosed properties, and I didn't really have the time to do NPNs on the side, but it seemed like something I could expand into in the future so when Scott approached me with a JV (Joint Venture) proposition to passively invest in some CFDs he was buying it seemed like a great way to get some exposure to how these played out. In his initial email about the agreement he said:

“We will be providing monthly updates to our investors, along with quarterly payments (or larger chunks depending on if we sell the asset off). We will also be providing collateral files for you to review.”

Unfortunately, after wiring the money to Scott in October 2017, the promised monthly updates never came. For the first 2 months I gave him the benefit of the doubt. Having invested in a few notes I knew that getting servicing transferred and disclosures out to borrowers could take some time and it was clear Scott was a busy guy. But then I mentioned to another local investor I had started working on NPNs and had invested with Scott, he hesitantly told me that he knew of another investor who had a real hard time getting their money back from Scott, he didn’t have a lot of details but advised me to be careful. So at this point I started being much more persistent about asking for updates and I did start to get some from Scott's assistant. One of the 4 assets had made payments and looked like it would become performing. It seemed like things were on track, and I looked forward to my first promised quarterly payment. Mid-March I asked Scott about it and he assured me it was being processed and I should have it in a few days. A month goes by, with no payment or update. I can see on Facebook that Scott is off vacationing in Europe so I give him a pass for not responding to my inquiries. I try to email the assistant and get an Auto reply that as of May 22 she is no longer working there.

When Scott gets back in June 2018 he tells me that his assistant has not been updating the files for a couple of months, but that he will get my payment out to me by the end of the week. A week goes by, no payment. I ask about it and get no response, a few days go by, I ask again, no response, a few more days. I start hitting him daily. Finally he does wire me a payment but there is no accounting of which notes it is for, what is principle, what is interest, or anything like that so I start asking for that info. He tells me he will upload the full accounting to an online account I can access (as agreed to in the JV contract) by the end of the week. Same story as before, I keep asking for the info and getting no response or occasionally "I will get that to you in a few days". This goes on for several months.

In Feb this year (about 15 months into the deal) Scott tells me all the assets are up for sale. At this point I still have not received any additional quarterly payments and have no idea what is going on with any of the loans aside from a very infrequent and vague response form Scott like “one loan has made a few payments and we are working with legal to cancel the contracts on the rest.” A month goes by I ask for updates, no response, same next month. I look up in the county records to see if I can see anything. I see that the deeds were recorded into Scott’s Company but the deed of trust that was supposed to be recorded at the same time in favor of my company to secure my interest in the property was never recorded. There is also an $800 water lien against one of the properties. When I finally get Scott to respond he again says all assets are being sold and I should have the money soon. Fast forward 6 months and the same investor who initially warned me about Scott sends me a link to the following BP thread:

https://www.biggerpockets.com/forums/70/topics/738696-do-not-invest-with-scott-carson-we-close-notes-or-inverse-asset?page=1

It is quite lengthy but to summarize, it turns out several other investors have also had negative experiences with Scott including:

Gerry Cohen, Al Curiel, Beth Hale, Bella Scanland, Chris Frank, Michele Orgell, Kristin Cook, Gar Parries

Most of the stories are almost identical to mine. At least one takes it a step farther and say that Scott partnered with multiple people on the same asset without their knowledge. Many have or are getting legal judgments against Scott. As I’m reading, the thread I’m hoping to see someone jump on and defend Scott and say they had a positive outcome investing with him. Nope. Instead I see people I recognize from presenting at his NoteCamp event saying they think he will probably go to jail. I type in Scott Carson the Travis County District Clerk site here:

https://www.traviscountytx.gov/district-clerk/online-case-information

and find 7 closed and 7 active cases against Scott

From there I go to the Clerks site to see the judgments:

https://www.tccsearch.org/RealEstate/SearchEntry.aspx

There are 4 from what look like investors and one from the IRS: 

One is particularly troubling as it specifically mentions Fraud:

I started to look at other counties. Williamson County where Scott is located posts their Jail Records with mugshots online:

https://judicialrecords.wilco.org/PublicAccess/default.aspx

Not good. Booked 4/15/19 Charge: Writ of Attachment Released on $10k bond 4/16/19

I had to look up what a writ of attachment was. From Wikipedia:

“A writ of attachment is a court order to "attach" or seize an asset.[1] It is issued by a court to a law enforcement officer or sheriff. The writ of attachment is issued in order to satisfy a judgment issued by the court. A prejudgment writ of attachment may be used to freeze assets of a defendant while a legal action is pending. Common grounds for obtaining a prejudgment writ of attachment are that a defendant has committed fraud or that a defendant is prepared to hide assets from a court.”

So at this point I'm pretty scared that my entire investment is in Jeopardy. I finally get Scott on the phone and he tells me not to worry, he has already made it right with all the people on the thread. I ask him why the deed of trust was never filed for me, he doesn't really apologize or give any explanation but says he will get that done right away. Days go by. It doesn't happen. I tell him I want my money back per our contract terms. He says no problem, that he has bids on all the assets they should be closed by the end of the month and he and he can pay me out then. The end of the month comes. No money, several ignored calls, texts, and emails. Eventually he does respond with some vague excuses. He is waiting for IRA companies that are taking longer than usual on some, there are some title issues being cleared up with others. Seemingly plausible, but it seems like just a stall tactic.

By this point I have talked to several other investors who have been mixed up with Scott. The ones that did finally get something out of Scott all said it was not until they started hurting him online. So I started reaching out to people from NoteCamp and my wife started contacting people who were having him on their podcast. After that he agreed to transfer 3 out of the 4 assets over to my company. This time action was swift. He actually showed up unexpected at my doorstep at 7pm to personally deliver the loan files. I tried to get him to explain what was going on but he said he was late for another meeting. The 4th asset was allegedly still being sold and was supposed to close by the end of the week at which point he would wire me the money. If you guessed that the end of the week came and I didn’t get paid, you must have read the rest of this post. Or maybe you read this one:

https://www.biggerpockets.com/forums/70/topics/757247-another-victim-of-scott-carson-we-close-notes-and-inverse-assets?page=1

or this one:

https://www.biggerpockets.com/forums/70/topics/738696-do-not-invest-with-scott-carson-we-close-notes-or-inverse-asset?page=1

So I guess I got something. I'm sure Scott would add me to his list of investors who had some delays but were taken care of in the end. But I have spent way too much time stressing about what was supposed to be a passive investment and now I have to do the work to dispose of the Assets that he was supposed to do. Not exactly what I signed up for. I can now finally see the servicing records on those 3 CFDs. One CFD never made a payment but he didn't take back the property in almost 2 years. Two of the three have made some payments. He collected over $12k in P&I payments. 50% of that was supposed to go to me in quarterly payments. I only got one payment for a bit over $2k. He also still owes me for the 4th asset. If he does pay those off I will post an update. Scott has wronged a lot of people, I sincerely hope he can make it right.

I also invested with Scott Carson at the end of 2017 in a joint venture agreement that was supposed to take 12-18 months to complete. My experience has been pretty similar to what most have posted. After taking some of his educational material, (which I thought was pretty good, and allowed me to invest in a few notes on my own) I decided to JV with him on 4 assets he was acquiring. Our JV agreement said he would do all the work out on the assets and provide monthly status updates, quarterly payments of any loans that became performing, an online page where I could see accounting for each asset, etc. In close to 2 years I have only received maybe 3-4 "updates", 1 payment (after several requests), and lots of emails from me that just went unanswered. Up until now I had given him the benefit of the doubt that he was just busy with his other ventures and that surely someone who had worked so hard to build his brand would not tarnish it by treating his JV investors poorly. I have asked him to terminate our agreement per its terms, and will update if he does make it right in the end.

Stormy,  You will not be able to just call the county clerk and ask them if there are any liens on 123 Main St. like you can with the city.  You will have to dig through the records yourself and it is easy to miss things, but it is a skill you are probably going to need to learn to have success in tax foreclosure investing. For your first deal you should probably order a title report from a company like Pro Title USA or a local title company to verify what you find out on your own.  It is going to run you around $100, so like you said, you can't really do it on every property you are interested in, but if you are just focused on one resale property that you think you seriously might purchase it is probably a good investment.  If nothing else it will be a good way to check how well you did at finding liens at the county clerks office.

You need to go to the county clerk to find out if there are any liens on a property. Many, but not all counties have this info online.  The full scope of doing a title/lien search is sort of beyond what I can cover in a post, but essentially you need to start with the current owner(s) and see if they have any liens in their name and then go all the way through each name in the chain of title.  In my opinion, the liens that are most likely going to get you are city liens for mowing and demolition, and the best way to find out if those exist is to call the city (assuming the property is in city limits) and ask them if they have any liens on the property (typically it is someone in the finance department you will need to speak to).  It is also worth asking them if they are ever willing to negotiate the amount owed.    

I have bought some good deals at resale, but you need to be extra vigilant with your due diligence, sometimes there IS a reason that nobody bought the property the first go round (no road access, environmental issues, etc).  Often times though the taxes owed were just too high for it to sell at the first auction, and once the price is reduced at resale, it makes more sense as an investment.

I think you are wise to stay away from an undivided interest situation although to be honest I have not come across that very often.  How did you find out about it this time?  Occasionally I have seen at auctions where the legal description will be for a 50% interest in a property, but other than that I'm not sure how you would check for that.  

If you are new to tax foreclosure investing I would highly recommend the "Texas Houses for Pennies" course by Darius M. Barazandeh.  In addition to being a thorough education about how the tax foreclosure process works, It has a great module on lien research where it takes you step by step how to search online to find liens.  I think it was a couple hundred dollars when I bought it, but that was a few years ago now.  If you are seriously considering bidding on property I think it would be money well spent.

Stormy, after the 180 day redemption period you will still have issues with the clouded title.  If you want to use the land as collateral for a builders loan you will either need to hire an attorney to do a quite title suit, or use a company like Tax Title Services (I'm not sure if there are others) to certify that the foreclosure was handled properly and then use one of their partner title companies to get title insurance.  I used Tax Title Services recently on a vacant home lot I got at tax sale and it was about $2400 and took about 6 weeks for them to certify the title.  Then you still need to pay for title insurance based on the value of the property.  So make sure to factor that into your costs.

I think George P. is correct about the tenant not needing to be a member of clearXchange for Quickpay.  From Chase's FAQ:

• If your recipient banks with a participant bank in the clearXchange network, they should register with their bank's payment service and won't have to enroll in Chase QuickPay. Otherwise, your recipient will need to provide a U.S. checking or savings account at another bank and an email to enroll in Chase QuickPay.

So unless anyone chimes in with an example otherwise, it looks like the QuickPay  service will work with any U.S bank.

I'm pretty sure both Quickpay and Cozy offer tenants the option to have the rent automatically deducted every month without having to do anything. 

I have been trying to make the switch to online payments recently and have already been through the shut down of Williampaid and now IPN.  Here is my experience with some of the alternatives that have been mentioned.

Chase Quickpay (free, but at least one party must bank with Chase):

I have some tenants that have Chase accounts that use quick pay and it works great.  I have thought about getting a Chase account myself so that I can use it with tenants that don't have Chase accounts, however one potential issue for using it for all of my rent payments is that their bank must be a part of the clearXchange network.  From what I can see this network covers most of the big banks (BoA, Wells Fargo, etc.)  however many of my tenants bank with small credit unions who may not be a part of this network.  Has anyone who uses Chase Quickpay run into an issue with a tenants bank not participating?

Cozy (free):

I just set up an account with them and set up a dummy "tenant" to see how the experience was for both parties.  I thought set up was pretty easy on both ends. To anyone considering this option I would say, do not be put off by previous comments about difficulty of setup. 

As a landlord, all you need to enter about the tenant is name, email address, rent amount and choose a date "lease"start and end date or choose month to month.  As someone mentioned the "lease" in cozy is just saying when to start and stop payments, I chose month to month even though my lease is for 1 year because most of my tenants end up renewing or going month to month at the end of their lease.

The tenant gets an email invitation with a link and what I felt was a pretty easy process to create a username and password to set up an account.  Both parties will need to verify their bank account by verifying two deposit amounts.  In my experience the deposits were made almost instantly but the site says it can take up to 3 days, so don't wait until the last day of the month to start the process. You may need to do some hand holding and prodding to get your tenants to complete this step especially if they are new to online payments.  

As a tenant I scheduled a payment for the 1st.  As a landlord I got an email on the 1st that a payment had been made and the funds actually hit my account on the 7th.  For some this delay might not work, but for me it is fine.  Since I am still trying to win over tenants to pay rent online I use the date they submit payment as my receive date rather than making them try to account for processing time.

Quickbooks E invoicing ($.50 per transaction plus you need quickbooks):

Since I was already using IPN I tried to use their new service, however the deal breaker for me was that I had to manually create and email an invoice each month.  There was a recurring payment option but only for credit card payments that incurred a 3% fee for each payment.  The tenants also had to wait to get the email before they could pay rent, they could not just log in and make payment like with IPN.

For me the winner is Cozy, I just hope they stay in business so I'm not doing this again next year.