notes are probably making two times more than a rental property cash flow.

What is not only note investing, but what is a note? Basically, I’m buying the right to

receive the note payments instead of the original owner or original lender. And we earn passive income from these real

estate transactions without tenants, repairs, or landlord headaches. So, let’s say I have a $100,000 seller

finance note, and I just need 30 grand. and I meet you at the RIA. What’s that conversation look like?

You don’t have to buy the full note. You can just say, “Hey, I’ll buy 5 years worth of payments from you. After 5

years, you can have the note back.”

Welcome back to the Hybrid Real Estate Professional Podcast. The show where we help you build a life of abundance through real estate and small business

investing without compromising what matters most. Today’s guest is Sierra Davis, founder of Essential Investment

Group and creator of Wealth with Notes. After paying off her student loans early with profits from her first mortgage

note deal, Sierra dedicated herself to helping others build long-term wealth with real estate notes. We’ll get into

what note investing is, how beginners can start, and how to think about returns, risk, and scaling. Sierra,

welcome to the show. Hey, great to be here. Thank you, Aaron. Yeah. So, before we dive into the

strategy, would love to just kind of know who we’re talking to and what you’re all about and just kind of your quick overview.

Awesome. Yeah. So I like Aaron said, I’m Sierra Davis. My background is in data science. And so I primarily focus on

acquiring data, looking at data, analyzing data, doing research, predictive modeling, all of that stuff.

Really, really nerdy and wrote the numbers that I wanted to go to the

corporate ladder as most people want to do in their careers and realized that I needed to get MBA and all those things

to get there. So because of that, making six figures in W2 career, you still get

student loan debt. And so there I was kind of thinking through that. And so really transitioning how I thought

differently about my career and about investing was really like after I graduated with my NBA, it’s like I had

to figure out how to do something. And so my corporate job kind of allowed me to think differently and think with data

in mind. So kind of taking that route into figuring out what I actually wanted to do as I, you know, got older and

wiser. So that’s a little bit back me. I’m born and raised in Kansas City, Missouri. I have an amazing husband and

a three-year-old son, and they keep me busy and part of why I do what I do.

That’s amazing. You know, whether you know it or not, you are the exact archetype that this show was built to uh

talk about and interview, which is the hybrid real estate professional is someone who leverages skills, income,

connections, some sort of strength from their career or or an other area of their life and leverages it into some

type of real estate or small business investing. So, you fit that perfectly because you took, like you said, you you

took all the data science and um predictive analytics and all these different skills that you probably wouldn’t have built had you not gone

down that path and got educated and got experience. And now you’ve turned it into a business

uh around a strategy that I’m sure you spent a lot of time kind of dating before you married and um and so now you’re even though

you’re out of your corporate gig, you’ve got I’m sure a full-fledged business which I would love to hear about.

Yeah, absolutely. So in essential investment group uh we acquire um performing notes. So we acquire

performing notes and I can get a little bit into what actually a note is um and we earn passive income from these real

estate transactions without you know tenants repairs or landlord headaches. And so that’s the beauty of um investing

in mortgage notes. And on the flip side, what we do is, you know, allow buyers to get access to home ownership that they

couldn’t get through traditional financing. We create performing assets that either generate monthly income or

can be sold to investors for immediate liquidity. But we’re basically wanting to create these win-win opportunities

for buyers, for sellers, as well as our investors that we do work with. Awesome. Yeah. Let’s take it up one

notch like all the way to I guess 101. You know what is not only note investing but what is a note?

Yeah. So essentially a note is short for promisary note and so when you you know

lending to you know family members or friends you might have a promisary note I promise to pay X Y and Z um after 5

months or whatever. Um so that’s kind of a promisary note a promisary note that

um is attached to a mortgage note or a deed trust basically securing the investment on a property. Um so

typically how it works when somebody buys a house um they don’t have all of the cash available. So what the bank

will allow them to do is you know get some financing for that. And so that particular um financing transaction

creates this promisary note and this mortgage or deed trust depending on what state you’re in. And so you’re basically

agreeing to pay the bank um you know $500, $1,000 a month for 30 years at

some type of interest rate. Um and so that is the idea of creating a note. So

a lot of people don’t know that this is a thing. And so I tell people all the time is like most people have been on

the other side of this transaction where they’ve gotten the house, didn’t pay cash for it, they got a loan, but the

bank set up these payment terms monthly. Um it’s basically a contract that you signed um and that basically you agree

to um as a homeowner make these monthly payments and if not then the bank can do

some things that um can cause them to get paid you know foreclosure and things like that. So really the idea is

creating this promisary note um and then allowing that to be an asset and where

you know I can come in as a investor. So basically an investor would be um people

who go out and buy these promisary notes and that are attached to these properties. Um and I say property

because you know notes can be on you know single family, multifamily, mobile

homes, even land. Um, so there’s some notes that are created in all of these different asset types. Um, and so as an

investor, I can invest in these notes and basically I’m buying the right to

receive the note payments um, instead of the original owner or original lender. Um, and so then I can basically buy the

note from the unpaid principal balance and then start collecting those checks from the borrower myself.

Yeah, it’s really brilliant. I think you’re right. Most people don’t realize maybe they go out and get their mortgage and uh you know they go to the title

company and they sign the packet. They’re signing a note. They’re signing usually a deed of trust or whatever the state specific equivalent is.

Um but maybe they’re not realizing that usually you just think of the bank quote unquote on the other side of it, but

there can be private investors and banks sell notes all the time. Um what’s interesting though to me is

that there’s kind of this like face value of a note, right? When a mortgage company, if I buy a $400,000 house and

I’m going to put 25% down payment, then I’m going to borrow 300,000, right?

That’s a 25% down payment. And then they’re going to calculate based on that loan and the interest rate we agree to

what the monthly payments are and what the amortization table is over the next usually 30 years.

Mhm. But my question for you is that’s kind of the market or face value of that note. Yeah.

When you go find notes to buy, are you buying them at that market value or are you looking to buy things at whatever

the equivalent of a discount would be? Yeah. So, because I, you know, in the

note world, yes, we’re buying at a discount and that’s the beauty of this. And so, what um I kind of like to give

an analogy is like say you, I know Costco has the gift cards that you can buy in bulk, but imagine you buy like a

$100 gift card, but um you buy you know buy it for $80. So you basically pay

less for that. And so um the reasons why um you know you can get a discount is

because many of the sellers that I work with um are those who carry notes and

basically they’re do seller financing. So uh people you know want seller financing to obtain properties. And so a

lot of the times there’s a seller that will carry that note back. Um and they don’t have to be the bank. They might

have um gotten some of their down payment. um they’ve got an upfront cost and they pretty much got their money and

so they’re okay with getting a little bit of a discount for that paper. Um and so some of their motivations, you know,

could be anything but either, you know, going to do another deal or retirement,

paying taxes, medical expenses, just anything that could happen. And you

know, as our job as an investor is making sure that we help them out and so like I said, the win-win situation. So

whatever their reason is, we’re trying to get them options to get them cash and get them what they need. And so um we’re

buying at a discount. Um you know, I will say the performing notes that we do buy is not as steep as a discount as

non-performing, but um we’re targeting anything from like 12% yield um 15%. And

so um example, you know, simple like I bought a note for $30,000 where the

unpaid balance was 36500. And so basically paying that discount uh which

is great for us is basically the discount boosts your returns instantly. And so now I get paid every single month

based off of the contract that they agreed to originally. So that doesn’t change. And so I’m getting those

principal interest payments um just basically from one uh lender to the

next. And that’s kind of how that works um in the discount world. Yeah, that’s fascinating. So seller

finance is something you hear about quite often in the real estate investing world and a lot of people accept seller

finance offers for different reasons. Maybe they’re retiring and they don’t mind carrying the note or they want to

spread out their capital gains or whatever it is. And what you’re saying is you can go to someone who has a they

have seller financed their property and issued a note to somebody else and you buy that and even if it’s at a small

discount where the win-win comes in is that they’re getting their money today

and you’re getting a note at a small discount which gives you a higher yield. So it is really a win-win if that person

in fact does want to liquidate that note. Yeah. This is a time value of money,

right? So Cassaday is work more than payment spread over decade. And so we’re

creating a win-win situation. We’re getting them up front where they don’t have to wait 30 years to get all their payments. Uh we get maybe 10 to 20%

discount. Um and then they go and do other deals. And so yeah, that’s the

beauty of it. I think this industry and all of these things within not investing is a lot of extra strategies, a lot of

things you can do, but it’s really like how can I help borrowers, lenders,

buyer, all of these people and get them out of a situation that they might have gotten into but don’t know how to get

out of. And so we’re trying to make sure that we give them the best options. What’s interesting between this and like

wholesaling, for example. Wholesaling, people go and try and buy houses at like 40% discounts, right? Something where

maybe it is solving a problem. Maybe that person’s behind on their taxes or for whatever reason, they just got to get it sold and they might take a loss,

they might break even, whatever it is. That is like a very specific type of situation that usually is not very fun.

But I’m imagining some of these conversations you’re having, it really is a win-win. Like if I had seller

financed a note for $150,000 and you made me an offer to buy it for

$140,000 next week, but I was going to have to carry it for seven more years or whatever my terms were. It’s a pretty

compelling offer and we both win. Am I missing something? No. That’s the key right there. And so I

think that’s where a lot of investors don’t know how to have those conversations or even know that they can

have those conversations. And so, um, I’m sharing all the things that I’ve done over the years to help people know

that, hey, you know, the local RIA that you go to, there’s probably people that have done seller financing deals. Um,

and maybe they want to do more deals, but they don’t know how. And so, um, you can give them opportunity to go do

another deal by buying uh their note. And you don’t have to buy the full note,

too. So, you can buy partials of notes. say they only need X amount of money, you can just say, hey, I’ll buy 5 years

worth of payments from you. After 5 years, you can have the note back. And so that’s the cool thing about note

investing is that okay, you only need 3 years, 5 years, I can do that. I’m making sure that in on from my my um

aspect of as an investor, that kind of helps me as my risk because I, you know, lowered my risk by not having the full

note. Um the equity is still good as well. So, um that’s kind of where um

those things can be be done at your local meetups every day um that people are doing. And so, uh that’s the beauty

of seller financing. So, let’s play that last part out as an example because that was actually going to be one of my questions. Can you do a

partial purchase? So, let’s say I have a $100,000 seller finance note property that I sold

and I just need 30 grand really bad. I meet you at the RIA and um what’s what’s the conversation

look like? Yeah. Yeah. So, the conversation is basically, you know, as an investor, I’m like, you know, how can I help you? Um,

like basically your number, whatever you’re looking for to get and looking through all of the aspects of a note.

So, you know, do within the due diligence part, I’m definitely looking at the property, the paperwork, as well

as the people in that deal. And so I think that’s where I’m like, “Okay, so if you’re needing this, let’s look at

what you have, where the property is located, and we can work this out.” I like to buy a first position. And so if

that’s good and paperwork’s good, the borrower has been paying consistently, I think that’s like the surface level of

due diligence, and then we can work from there and create like a partial agreement where maybe you don’t need all

the cash now, but you can get some of that money. And so just structuring the paperwork correctly, I just recommend in

this business to get a great attorney that can create this paperwork for you. But yeah, there are some really good

things you can do within the like partials and you know that’s a big word,

but really just kind of thinking through as an investor you can get your return, how you they can get their return as

well and making sure that your risk is protected, you know, doing all the due diligence that you need to do.

Got it. Yeah. So basically, you know, there’s a way to do it. Obviously, you have your own due diligence process, which you just described. And then

you’re trying to meet people out in the world and figure out what problems they have and if what you have to offer is

something that could solve them, which I will say, this is the first conversation I’ve had with anybody who does what you

do. And I can immediately think of people probably off the top of my head that are

in situations where they’re carrying long-term notes, seller finance, because a lot of people take seller finance offers because they’re the best offers.

you’ll get the highest offer and um so you might sell your property for more than you would have if it was a

cash offer, but you don’t get the cash. So you’re coming along and kind of solving that problem. Even if they sold

a little bit higher than what they would have, but you cashed them out at a discount, they’re still probably walking away with

what they originally calculated as their bottom line and a lot sooner.

Exactly. Yep. And I think that people make sure that there are many people and if you’re

new to not investing, it’s also good to have the education of what the paperwork looks like as well. So, um there’s

sellers who are doing seller financing deals and making sure that their paperwork is in order correctly. So, you

can work with them to make sure all of that is good too in the long term. Uh because I think the one thing that as a

investor I’ll make sure that I tell people if you’re creating these notes to

make sure that they’re sellable at the end of the day. And so that kind of allows you to, you know, get liquid

pretty fast. Whereas if you’re, you know, to kind of a little rough around

the edges, it’ll take a little more or you might get a steeper discount. But I think it’s important to have that

upfront paperwork, collateral, all of those things together so that you can have a sellable note easily.

So the analogy I’m thinking of is like if you buy, you know, $150,000

C-class rental property and you barely take care of it for 5 years and then you go turn around to sell it, you have a

bunch of deferred maintenance and it’s clear that you don’t, you know, didn’t really know what you were doing and you try and sell that property, you’re

probably not going to get top, you know, uh, price. Whereas if you package things correctly, run a good operation, have a

good rent roll, you know, great financials that you can show when you go to sell that property, you’re going to get a better rate than

the other person. Exactly. So, what is the note equivalent of that? Like you you use the phrase um performing and

non-performing like what makes a good note and then I guess what would be like a buy box for a note investor?

Yes. So, what makes a good note? That’s a big question, but you know, just in general, um, thinking through like the

borrower, let’s start with the borrower. Have you qualified them? So, have you taken the time to, you know, either look

through like a RMLLO? Um, going through either their work history, their credit

scores, can they afford all of these payments? Right? Did you just get $500 down? Right? Um, so think if you got a

strong 10 to 15% down, they have good credit. That’s a really, you know,

stable job income coming in, that’s really great. Um, that we like to see. And then the property, thinking through

like the equity involved. So, does the borrower actually have equity in the house? as a note by you know buy box I’m

thinking through like I would prefer to buy notes that have you know

lower than a loan to value of 70%. So if you just create this note or the value

is a little you know iffy I might reconsider because my risk is a little bit better. I want make sure that the

borrower has equity and also the collateral itself like the property if I have to foreclose can I sell this

property quickly? Um and so is it in a good area? um is it somewhere that um

somebody would like to stay or you know is it in the middle of nowhere even though it might have 15% return

if I can’t sell it then that’s no that’s no good and then really thinking through the paperwork too um the paperwork is

pretty pretty strong um are you using a third party service or can I just look at all of these notes are you just

putting it on pieces of paper and just counting for it so those are things that um you know look for like third party

servicing um paperwork recorded do you have the original documentation of you

know the these things and you know put together well so really just packaging it up so thinking about that C-class

like property um if some of those things are missing yeah you could probably you

know fix it up and do things with it but really to make a strong quality note I

think you have to have uh quality paperwork quality property that someone wants to live in if something happens

and then the borrower is really consistent with their payments um they can afford the monthly payments as well.

Awesome. Yeah. So, you’re looking at the borrower but also the property itself or the asset itself to say, “Hey, is this

actually worth enough to cover in the event that we have to take it over? Will you be able to sell it quickly?”

because I’m sure you don’t want to have a note tied up and a borrower that’s defaulted and take possession of an

asset that you have no interest in operating and can’t sell. That’s an important element, too. And I

imagine what this does is it means that real estate investors or people that have had experience buying or operating

single family rentals make for great investors because they know what goes into it and what it takes to own a

property and keep it growing in value. Yeah. that those real estate agents, you know, I think real estate agents have a

really strong um like up in this in this industry if they were, you know, interested in diversifying some of that

a commission check like they know what property they drive down, you know, in their areas in their backyards. They

know what properties are worth. They know, you know, lenders and, you know, how to qualify buyers. So, I really

think that real estate agents would, you know, benefit from investing um some of their commission and diversifying in

that way because they know what that looks like um from that aspect and they I think they know a lot more that goes

into it as well just going through day-to-day with their buyers and sellers. Yeah, absolutely. I think in that hybrid

uh professional spirit, right, it’s like leveraging other knowledge that you get from other areas of your life to give

you an advantage in an area like this. Yeah, absolutely. So, before we get out of the types of

notes, you mentioned non-performing notes, which I assume just means people that are not current on their payments.

Is there more to that? And do you buy those? Yeah, so typically it’s like 90-day delinquent. Um, and so, um, they’ve

might have been in the drawer, some they might have not been paid in years. Um, and I typically don’t buy the

non-performing notes. And the one reason why um and originally I wanted to

replace my income. And so when you’re buying a non-performing note, you’re not getting paid. And so you’re if you’re

having to have, you know, certain expenses, uh whether it’s working with a borrower with lawyers and getting it up

to, you know, modifying the note. Um and so it takes a little bit more expenses

up front, um to want to either get a refering or foreclose. And some, you

know, some people might be interested in that way um because it’s it’s really good, you know, the returns and so you

can get these non-performing notes really cheap. Um but at the same time,

um you know, I think there’s like a a strategy for that. um if you’re interested in getting um property in

that way. So as a lender you can foreclose and then you can get this you know valued property um whatever that

you know whatever that value is. So it’s a strategy I think it’s you know it could be advanced and so I think it’s a

little bit more active um versus um the performing notes.

So you know depends on what you’re optimizing for. you’re you’re interested in these really good high returns, you

might buy a non-performing note for 25 and they still might have 50 left on it.

You got, you know, double your money. Whereas, you might have to work with a borrower. Um, I don’t like people

dodging my calls. So, um, that’s just the thing, you know, but, you know, I think it’s people who are interested in

it, they do really, really well. you’re almost in that scenario buying it with

the understanding that there is a probability that it will foreclose and so you better be prepared to take it

over. But if you do that then you get it at a crazy discount because you’ve negotiated and you bought the note at a

like in your example 50% discount. Yep. Very smart. So I’m starting to see the ladder of like um beginning note

investing all the way through advanced. Um, so kind of like a one one question I

have around your background, predictive analytics, there’s a bajillion things you could have applied

that to in the, you know, modern world and it sounds like you got really deep in that world. You studied, you got a

lot of experience. How is it that you landed on note investing specifically as a place to

apply all of that and build, you know, make it your your one focus? Yeah, that’s a really good question. I I

think for my analytical mindset, I thought about, you know, everyone who

says real estate is, you know, a wealth builder. So, I was like, okay, that’s really intriguing, but I wasn’t really

creative in the aspects of like rent, flips, fix, and flips and creating these

really nice, amazing housing houses for folks. And um the people aspect was

really interesting as a landlord. And so there was something that opened my eyes

with the spreadsheets. And so I could go through and code and look through different types of portfolios that

really kind of stuck out to me that I could use and leverage what I know now that I do every day into understanding

how return works, how to underwrite, how to make sure that I’m getting these

notes without having so much risk or de-risking and things like that. So really thinking through

my perspective as what can I leverage the fastest and the skills that I have

the fastest. I didn’t have any skills of like maintaining property working with landlords and maintenance and

contractors and things like that. Whereas you know some might have that experience and I didn’t have any like

sales background as you know but I have computer skills I had programming skills

to where this was right up my alley. Yeah. No, I can see how all those skills

would apply directly. And you want to have an analytical approach to this type of thing because a you don’t want to get

too emotionally wrapped up in any of the specific dynamics of each situation. You

want to be able to look at things objectively and um also kind of see where the market’s going, which is another

question I have around interest rates. So, we’ve been in a high interest rate environment for the last three years. I

understand rates are starting to come down, but you have two things at play. One is all the people that are under

what everyone calls the lock in effect where they got all these cheap mortgages, you know, 2.5, 3.5%,

basically anything under four. Yep. And those people have held on to those homes for much longer than they normally

would in a normal interest rate cycle. And then on this side of it, we now have

people that bought in 2022, 2023, 2024 at 7 or 8% because they were forced to.

And now rates are starting to come down in between those two ranges. So, how does all this influence node investing?

Whether it’s does it make it more compelling, less compelling, harder, easier? What’s the effect on on what

you’re doing? Yeah. So, I think right now it’s a really good market to invest in notes.

And the reason why I think you kind of led on it, so if you’re from the investing world, if you’re buying a DSCR

loan or you have a DSCR loan, the interest rates are pretty high. And though your cash flow gets lower, you

know, expenses, insurance is really, you know, up there. Now, as a data scientist, I could do a simulation

basically saying rentals don’t really cash flow as much as a note would. So

notes are probably making two times more than a rental property cash flow. In

this market particularly, because of the high interest rates, high expenses, and insurance, investing is really winning.

And so if you’re taking the same $25,000 and buying a note or getting a DSR loan

and down payment, you’re going to come out way on top if you invested that same

$25,000 in a note versus a rental property. But you do get equity. I

definitely know the pros and cons in that, but I think if you’re optimizing for cash flow, I think it’s a really good opportunity to invest in notes. Um,

as far as the notes that were created in the really low interest rates, those are

one of those things where, you know, have a yield calculator and sometimes you have to offer a little bit more

discount because you want that 12, you know, my 12% at the baseline and so you have to kind of work with the seller to

see, you know, hey, this was at 2.5%. you know, I want 12%. And so, um, I

think they understand that, you know, normally, um, could just work with them as well. But in seller financing, you

know, it’s kind of seeing that 7 to 13% now. And so, um, those are kind of where

we’re looking at. And so, we don’t have to offer that huge discount when we’re making offers and sending out those

LOIs. Do you think people are going to be more reluctant to get rid of those notes if interest rates continue to go

down? I think so because if they can’t get what they want, um, they probably will.

Um, but at the same time, you know, I think they have to think about the liquidity and some people I

say 12%, you know, someone might offer them at 10% and I think that’s where you kind of have to find the the buyer for

you. And so, yeah, I think they might be reluctant, but also um understanding

that, you know, that’s a that’s a thing that, you know, some of these investors want their returns.

Got it. So, and when you say 12% or 10%, what you’re talking about is working backwards into what can I buy this note

for that will get me a 12% return on my cash. Is that Yeah. Yep. Yeah. So, basically the thinking

through the cash on cash, how what can I get on that 12%? Yeah. Yeah. Okay. And then when you buy one of these

notes, the intention is to hold it to maturity or no? Yeah. Yeah. So I basically hold it until

maturity unless I, you know, either want to do a partial note, which I will do, but typically I’m holding them up until

maturity. I typically don’t sell, but some of my notes have matured. They paid

off 2 or 3 years earlier. So that’s also nice and sometimes bad depending on the

that year. But, um, I think that’s where, um, thinking through now as I’m

getting into this full-time, what we’re looking for, how long we want to keep notes, and for the long term.

Yeah. And I would imagine too that refinances happen all the time, and you can’t plan for those because you don’t know when somebody’s going to do it. But

if you buy a seller financed property, they might refi three, four years down the road, especially if rates are lower.

Absolutely. Yeah. So, you just got to wait, anticipate that and expect that in the note world. And so um yeah, I think

that’s a good thing for us and you know we can hold our notes and as I mentioned hypo as basically like a scaling

strategy where we can borrow against the notes that we do have in our portfolio.

Um and so keeping basically keeping a spread so having an investor provide

some of the capital so we can buy more notes and um that’s the beauty of note

investing as well. So we work with investors to kind of get our scaling and

we do that um pretty well. So if we had to sell those NOTS, but we could also

keep them and then borrow against us. Fascinating. That’s a great segue into

you’ve mentioned we a few times and I want to know more about your actual business that you run, how you help

people, who’s involved, what are the different ways to invest, etc. Yeah. So um we as as part of their inves

essential investment group we basically help investors um as we acquire

performing notes to you know get some good returns on their um money that’s

probably uh works well with you know stock market or CDs stock markets fluctuate and so this is the opportunity

to kind of invest in um real estate notes that are backed by real property and uh don’t have the fluctuations of

everyday stock market moves. Um, and so we’re, you know, definitely always open to working with investors. And then two,

like like I mentioned before, uh, buyers looking for private and financing, um,

because they might not be able to get traditional bank lending, um, and so

working with buyers um, to get prop get them into property so they can have equity um, in their property. Um, I

have, you know, very brave stories about, um, a woman who has a, you know, she it was my second deal and she still

owns this home, but she has like $200,000 worth of equity now. Like if she was, if I was renting it out, she

wouldn’t she wouldn’t get that. And so, um, like I I keep going back to like the win-win opportunities. And so, we’re

always willing to help people as well. And as well as sellers who are interested in selling their notes, too.

um making sure we give them great offers um as you know no buyers and getting

them them the capital that they need to do other deals and do things um to get more liquid.

So no, thank you. That’s a helpful range and I appreciate too that you find ways to kind of give back and give people

opportunities to own when they might not otherwise have them. I want to understand better how that works. So if somebody wants to

invest with you, are you teaching them how to find and buy notes or are you buying notes and then they invest in

your fund of some sort? Yeah. So typically what you know we do onetoone basic deals within our

portfolios and so um our strategy is you know we have these notes and so we can

basically use them as collateral and then go buy new notes. Um if investor is

interested in you know buying a note with us we also do that JV as well. um but you know at a larger scale of a

portfolio um so that we can have the opportunity to get a strong return on

our capital. So is there not a portfolio or group of So I would imagine the more

of these you can collect that have strong underwriting, you guys have a process, you have a system, you have experience and um so like somebody who

wants to get started, can they invest in a basket of these and say hey like well then if one drops or

one defaults like it doesn’t take the whole thing down. Yeah. So as of right now we don’t have a fund yet but we’re looking to get to

that. Uh right now we’re just doing onetoone deals but you know if we think about that portfolio um as a JV partner

we a good GPL structure we can definitely have that pool of all these diversified notes um that range from

different regions cuz you don’t want to just pick one but we have different regions different collateral um and

things like that. So yeah that’s where we’re looking towards in the future. Very cool. And then the other side of

the business so I want to understand the mechanics of this. You’re saying you’re able to provide opportunities for people to live in and

perhaps finance houses that they wouldn’t otherwise be able to lend on. How does that work? Are you holding the note and providing So you buy a seller

finance note and then you find somebody who wouldn’t qualify and you say, “Hey, I will Yeah. So this is would be more of an

active approach of creating the note itself through like owner financing. So basically getting some property and you

know getting it to the value that is appropriate and then selling it on seller financing. um they get a down

payment a lot faster than the traditional bank loan process, but we’re still qualifying and doing all the

things that makes sure that it’s sellable at the end of the day. Um so that’s where we’re, you know, getting

people into homes in that way. Very cool. Can you do this in a

self-directed retirement account? Absolutely. Yes. So I have notes in my self-directed uh IRA. Um, and so that’s

the great thing about um, notes is that you just uh, fill out the paperwork and

you’re basically your custodian um, allow you to buy these promisary notes

um, and they um, collect the the income for you um, and through that paperwork.

But I really encourage people to start actually, you know, if they don’t have any capital for themselves, if they

don’t have any um sitting there, a good way is a self-directed IRA um because you can buy these notes and get 12 to

15% on um your income uh you know, and the income that’s um provided by the

notes. So I love self-directed IAS for these notes. Very cool. So now just to kind of round

it out a little more of the personal journey. So you shared where you started in uh predictive analytics and data

science and you got an MBA. Now you have your own business. I am quite sure that you probably wouldn’t have gone all the

way down that path if you knew that you were going to do this anyway. So I’m curious if you maybe can share a little

bit of some of the like discovery that you had in your own life that led you to

go into entrepreneurship versus kind of just running and gunning down the corporate ladder. Yeah, I think you know

just life in general just like thinking through um I had my first kid um three

years ago um almost four years ago now and really just thinking back like there’s a lot of time that I want to

spend with him and my family um and so that was one and really just thinking

through um what I wanted to actually do so you know I could keep going up the

corporate ladder but at the end of the day I wanted to do something for myself and so I had this this thing this side

hustle that I was doing. And so thinking through how I can I create this as a as

a business. And I think the the goal was basically to be more with my family,

spend time with them, have time freedom. Um all I need is my MacBook. I I can be

anywhere. And so um thinking through like if I was going up the corporate ladder, I probably would be a lot more

busy, you know, being a manager, a team lead, and and and things like that. and really just taking a step back and

saying, “Okay, I want to be more, you know, at home more um on vacations more.” And so really thinking about the

vision uh that I wanted to see for myself kind of changed um as becoming a mother.

I have children of almost the same age and uh that was definitely a big reframe for me too of I always talk about how

there’s this narrow window of time where they’re old enough to interact but they’re young enough that they haven’t

gone off and found their own friends and interests and gotten too cool for for mom and dad and

um I’m very determined not to squander that window and it sounds like similar sentiment to what you just said.

Absolutely. Yeah, it’s a great space now. like it’s been 6 months um that really just like I wouldn’t trade this

journey, you know, the journey is on being all of these things have to get done, but at the end of the day, oh man, this is great. I wouldn’t trade it in.

So, with that said, do you feel though that your W2 and all the skills you gained and the experience and whatnot

served its purpose in your life plan? Oh, yeah. Absolutely. Because now I can use AI with my business and so I’m one

step ahead of, you know, a lot of investors that are in this space now. And so like I know the tools to use. I

know how to do these things. And so really I think I got a great learning lesson in you know 10 years of being in

my career that now I can use it to scale faster, be a better investor, think

through things differently, have you know strong decision- making. So really I think it just was like a teachable

moment whether I think about it or not. It was really helpful. So now that I can go and do a lot more for myself and for

you know my family and other avenues as well. Yeah, absolutely. I that’s why I always

try and just kind of keep hammering that point home that your W2 is not your enemy. You know, especially if you do something

that is aligned with something you’re interested in or a skill that you have a strength in. You can become a

differentiated product in the market just by investing in yourself. And that doesn’t only mean taking online courses

and joining masterminds, which is incredibly powerful. Uh it also means having a career path that aligns with

what you’re trying to do and that’s a very powerful asset. And even though you’re not working there anymore, nobody

can take that experience away from you and is clearly guiding and influencing the success you’re having in your own business.

Yeah, absolutely. And so I, you know, I think people in in their WT like I could go back today. So I think that’s really

helpful. It’s like I knew where I didn’t want to be, you know, in my W2 forever.

But I made strong connections. I still did what I did, you know, could move in

excellence and and things like that because I knew that um even though I wasn’t going to be there, that’s just

how you move with integrity, you move with anything that you’re doing. So if you’re slacking off and you know, doing

things that you might cuz you don’t, you know, you know, you’re not going to be there forever, um it still doesn’t serve

you. you know, you still have to give and, you know, be a asset and strong value. And, um, I think that’s where a

lot of, you know, thinking through this past six months is like, yeah, I did my best every day even though I knew I

wasn’t going to be there forever. Yeah. No, absolutely. And I think it’s um, you and I were talking before we hit

record. There’s an interesting, it’s a very personalized calculation that people have to make when they’re

contemplating leaving or starting their own thing or whatever where you either have to build the business fully before

you leave so that you can feel perfectly comfortable and everything’s already running and humming, which is in most

cases not realistic, or there is a bit of a leap of faith where you have to maybe have the framework in place, but

you can’t invest all the time and energy to get it in full maturity until you’re out. Was there like you are an

analytical person by nature as you’ve said. Was there a specific way that you went about kind of figuring out what the

right time was? Yeah. So I think it was mainly thinking about you know time and so I was

thinking through like I was spending so little time on my business that if I

spent more time on that I could scale that up to more investors, talk to more people, just networking with them,

finding more deals. And so really I think that was the part of like the time thinking through okay calculating how

much time am I spending on this very little short window I have after work where now I can spend a little bit more

time and take that leap of faith. Not everything was perfect but really just thinking through if I had the time to do

this imagine what I could be doing. Yeah. And I’m sure as a data person, you

probably also had some idea of like, oh, well, if I spend if I’m currently spending one hour a week and I go to one

meetup a week and it leads to you run that data over a six-month period, it’s led to this many deals.

Well, it’s like if I 10x the amount of time I spend and go to three events a week instead of one,

you almost like reverse into like what it would take to get to your to your number. Absolutely. So, I think I have KPIs on

my whiteboard thinking like, okay, how many touch points am I doing? How much content am I making? like all of these

things are adding up to that one big opportunity. Um, and so yeah, I think that’s where keeping track of things,

um, looking through metrics, um, spending time, um, even like my phone, like am I doom scrolling or, you know,

should I be doing something else? But really the time aspect of being able to

identify it and run with that and make sure you have good metrics and KPIs that

you want to achieve um, is really important. Yeah. Awesome. Well, great insight on

not only uh building a business and uh how to think about that. I know a lot of people that listen to the show are

probably happy in their W2 and have careers that they like. That’s that’s the boat I’m in, but also have an

entrepreneurial gene in them that makes them want to explore and build. And so, it’s really fascinating to hear how

different people have navigated that and the different timelines. And um so, I appreciate you being open with that. And

of course, appreciate all the education on note investing. selfishly, I learned a lot

and uh this was a good opportunity for me to ask a bunch of questions that I’ve wanted to ask. So, with that said, uh Sierra, where can

people find you and if they want to start working with you or or investing um where can they do that?

Yeah, absolutely. So, um if you sign up for my email course, it’s free. Um it’s kind of giving you all the methods

there. So, if you go to wealthwithnotes.com, uh pretty simple, uh website that you can, um learn from um engage with and I

do send also emails from that. And then on social media, you can go to Sierra Davis official um on all platforms on

YouTube, um Instagram, as well as Tik Tok. Awesome. And I can personally vouch that

the email course is great. People who know me or have listened to me know that I love writing. I love nerding out on uh

reading different types of content. And it is very not only easy to consume and understand, but very informative. And

so, highly recommend that if this episode piqu your interest. So, we’ll make sure all that stuff’s in the show

notes. And, uh, Sierra, hopefully we’ll have you back sometime again soon. But, thanks so much for coming on.

Thank you so much. Thank you for making it to the end of today’s episode. As you may know,

podcasts are very difficult to grow organically. If you’re getting value from today’s episode, I’d deeply

appreciate if you can take 30 seconds to leave my show a fivestar rating and review. This will go a long way to

helping me reach more listeners just like you. Thank you so much in advance.