Scott Carson
Scott Carson has been a guest on Collecting Keys, the real estate investing podcast hosted by Mike DeHaan, Dan Austin and Dylan Koch.
Buying Distressed Notes To Make Millions with Scott Carson
Mike DeHaan interviews Scott Carson of We Close Notes about buying distressed first-lien mortgage notes from banks, hedge funds and servicers. Scott explains how he sources note tapes, bids at roughly 40-60 cents on the dollar, modifies loans to get borrowers reperforming, and exits by selling the reperforming paper at 85-90 cents or foreclosing. He also covers which states he avoids, Dodd-Frank, how he structures investor money, and why 1031 exchanges don't work for notes.
Key takeaways
- When you buy a note you own the debt, not the property — the borrower still owes the full balance, but you bought it at a discount, which gives you flexibility to modify that the original lender never had.
- Scott's deal flow comes from email drip campaigns to banks, servicers and funds plus LinkedIn outreach to asset managers — not direct mail or bandit signs. New note buyers should expect roughly a 10% offer-to-accepted ratio.
- Foreclosure timelines drive pricing: he avoids Cook County, New York and New Jersey (two to three years to foreclose), and demands bigger discounts in slow states like Florida. Washington requires a mortgage broker license to buy debt.
- Modifying beats foreclosing about 60-70% of the time. He regrets not modifying more in 2008-2009 because servicing, legal and rehab costs ate returns he could have had as immediate cash flow.