Nathan Turner: The Overlooked Real Estate Strategy of Mortgage Notes

Intro: Broadcasting live from the Business RadioX Studios in Houston, Texas. It’s time for Houston Business Radio. Now, here’s your host.

Trisha Stetzel: Hello, Houston Trisha Stetzel here bringing you another episode of Houston Business Radio. Today’s guest, Nathan Turner, president of Earnest Investing and is a returning guest to the show. So if you guys didn’t catch the first episode, we’re going to catch you up here. And we also have some important things to talk about in just a few minutes. So Nathan specializes in mortgage note investing, a strategy that allows investors to generate passive income by effectively becoming the bank rather than owning the property itself. After years in traditional real estate, Nathan shifted his focus to the note side of the business, helping investors diversify their portfolios and create steady cash flow through performing mortgage notes. He is also the founder of Diversified Mortgage Expo, an annual conference that brings together investors and industry experts focused on node investing and seller financing. Nathan’s mission is simple help investors understand how notes work and how they can build long term wealth through his through this overlooked part of real estate. Nathan, welcome back to the show.

Nathan Turner: Yeah, so good to be here. Thanks. Thanks for having me.

Trisha Stetzel: I’m so excited. If you guys are not watching the video. Nathan is smiling really big.

Nathan Turner: I love talking about notes. I love talking about business. And so I’m really happy to be back and talking about all of the above. So this is great.

Trisha Stetzel: I’m so excited to have you back. So let’s start with this.

Trisha Stetzel: In case people have not already heard our episode a few months back, Nathan, tell us a little bit more about you.

Nathan Turner: So I am I’m me. I, I live up in Canada. Uh, but all of my businesses in the US and since 2009, I have been in the note investing business. So instead of buying houses, I buy the financing attached to the house. So it’s typically that’s a mortgage or a deed of trust. Sometimes it’s contract for deed depending on the state, depending on the situation. But it’s that financing piece with the house as the collateral rather than buying the house itself. So I’ve been doing that for over 15 years now, and I love it. I just think it’s a great business and I want to spread the word because so many people don’t know that this is a thing, even though the majority of us are in a note, we just haven’t considered being on the bank side of things.

Trisha Stetzel: Yeah, absolutely. So let’s talk about that becoming the bank. I that was part of your bio. So what what actually does that mean in practical terms?

Nathan Turner: It’s it’s really interesting. So again, I didn’t know about this before I knew about it. And most people are in the same boat. Uh, so what it means is whether you are, uh, so let’s go a couple of scenarios. Let’s say you own, um, an income property. You’ve got a second house. Uh, you either bought it, you inherited it, whatever. You have this second property, um, you want to, you know, have that monthly income that everybody likes to talk about and everybody likes to have, but rentals doesn’t seem like a great idea because then you’re going to have to take care of the house. You got to fix the roof, fix the toilets, you’ve got tenants to deal with all that thing. The difference this this is, is, uh, you can sell that house and do it on terms. Uh, and so the person buying the house instead of going to the bank to get their financing, they’re just using you as the seller to be their financier. So they, they put down a down payment, uh, same as you would do with a bank. You put down a down.

Nathan Turner: Payment terms are a lot more flexible than banks are, and you can just work out whatever terms work. And now you as that, as the owner, as the one who has that note now title has gone into the person’s name, who’s living in the house, they’re making the payments and you’re collecting monthly principal and interest payments instead of rental payments. And the major, major kind of, I guess advantage to that is that you don’t own the house. And I know that sounds weird, but you don’t own the house. That also means that you don’t have to pay the property taxes. That means that you don’t have to fix anything on the house. That means that you’re not taking care of it in any way, shape or form. And the people living there are the ones who care about the house. They love the house. They’re fixing it up. They’re doing whatever. They’re the ones who own it. They’re the ones who take care of it. And then you just get to collect that monthly payment. Way less work for the same or more money as a rental.

Trisha Stetzel: Yeah, absolutely. All right. So what if people who are listening don’t have a second property, so it’s not an option for them and they might be looking for this kind of opportunity. Um, yeah, I, I guess I would assume that most lenders want to keep their loans. Um, so y yeah, so let’s talk about that. Like how do you get engaged in that?

Nathan Turner: Yeah, that’s where it gets really interesting because whoever did that loan, whoever put out the money or didn’t put out the money, but they’ve taken back this note now they’re collecting those payments over time, life happens and all kinds of different things, right? So you’re collecting on this note, uh, and after a while, you think, you know what? I would really rather I’ve got this other business opportunity coming up or I want to do this around the world vacation, or I want to fix up my own house or, you know, whatever. There’s all kinds of different reasons why you would want this lump sum of cash today rather than collecting those payments over time. So then that person says, well, is there a way to sell this? Like kind of like a turnkey rental property so I can sell the house along with the terms over to somebody else, get that, get my capital back out. And then now it’s somebody else’s issue, somebody else’s thing to deal with. So that’s where I come in. So I, I actually prefer not to be the one lending the money up front. I don’t actually put out money for that kind of thing. I look and see who has created a note, whether they’ve lent out the money or whether they’ve just sold the house on terms or whatever it is. They would rather have that lump sum of cash today for all kinds of reasons. And then I say, okay, I’m your guy. I will buy that loan. So instead of you collecting the payments, now it’s me for the borrower, for the one living in the house, nothing changes except where they send their payment. That’s all. So all the terms stay the same. Their monthly payment stays the same. Interest rate, all those things. Uh, now it’s just instead of sending it to Bob or Joe, Joanne, whoever. Now they’re sending it to me.

Trisha Stetzel: Okay, so how do you find mortgage notes to purchase?

Nathan Turner: Well, that’s where it gets even more interesting, because there’s not really a central database for this kind of thing. There’s no such thing as a loan MLS. Um, so a lot of it. So, so much of it is just networking and relationships. And it’s very much just a grassroots kind of thing. So, you know, somebody over here, they’ve got this note, they would rather have this cash today. I’m over here. How do we meet? All kinds of different ways. You can, you know, meet online, uh, different meetings or these note conferences. And so that those are different ways you can do it. But it’s a lot of networking. Sometimes you can use mailers, uh, things like that. But it’s, it’s just about getting out there and talking to people and see who’s got something for sale, who’s looking for something to buy.

Trisha Stetzel: Okay, interesting. And we’re going to talk about opportunities to get together in a, in a few minutes, because that’s one of the important reasons why we’re here today. Um, can we talk about risk and opportunity? Like there obviously there’s a difference between note investing and then traditional real estate investing, like you talked about a few minutes ago. Can we talk about the risk and opportunity associated with node investing?

Nathan Turner: Yeah. So the interesting thing is, um, well, let’s go into the risks. So let’s say you bought this note, um, they’ve been making payments and then something happens. The person in the house lost their job. Um, they got divorced or somebody passed away. Those are kind of the top three reasons. So something happened and now they’re not making payments. So now what? Now I’m, I’m the, you know, technically I’m the lender. I’m the bank. I’m the one that’s been collecting these payments, but now they’re not making those payments. Well, the good news is the, the thing behind this loan is that property. So that’s the collateral. That’s our safety. Uh, so again, that goes back to when you’re buying it, making sure that there’s an equity spread in there so that if that does happen, you’re going to be okay. So we can do all kinds of different things oftentimes. Um, me as the lender, as the bank, I will go back to the borrower and say, hey, we’re not making payments. So what’s going on? And we’ll see if we can work something out. And 99 times out of 100, we can work something out. We can say, okay, whatever it was, $800 a month isn’t working for you.

Nathan Turner: Could you do seven? Is that something that would work for you? And we can readjust terms, uh, lower our lower or raise the interest rate or stretch out the amortization. Like we can do all kinds of different things. They’re going to help them make it a, make it make sense again so they can get back on track. Barring that, if there’s something that goes wrong and let’s say they passed away, well, now there’s not anyone there to make payments in that case. Our worst case scenario, what I consider the worst case scenario is I can foreclose on that property. Then I do take title back. Now I’ve got the house and I can sell the house. I can rent it out, or I can spell it out on terms again and create another note. Excuse me. But then you’ve got those those options available to you. So that helps to mitigate that risk. But that’s kind of the major thing is, uh, what, like I say, the worst case scenario for me is taking back that property. So that’s, that actually is the worst thing it can happen. And if you’ve bought right in the first place, that’s can actually be an advantage as well.

Trisha Stetzel: Yeah, absolutely. So I know you kind of found your way here into node investing. What why does it keep your interest, I guess, versus being in the real estate space doing this node investing?

Nathan Turner: Yeah, there’s a few things. So when I first got started, it was all about nonperforming notes. I got started in 2009. And if you think back in the time, everybody was defaulting on their on their mortgage, on their deed of trust. So that meant there was a ton of opportunity for me coming into it, especially getting started. Uh, discounts were massive. So banks were trying to unload these for pennies on the dollar. So we were able to get some really great deals. And that helped me figure out really quickly how to become creative and how to talk to the people in the house and say, okay, let’s wheel and deal. Like, how can we get you back on track? And like I say, most of the time that works. Sometimes the house was abandoned. Sometimes they just walked away from it. That happened quite often actually. And in that case, then we would pursue a foreclosure and go through that whole process of getting the title back and then reselling it. So that that was because it was so active that very much kept my attention. As I’ve gone on and as I’ve kind of progressed through all this, I’m getting tired, I’m getting lazy. I’m getting to the point where I would rather trade those really high returns, uh, for something much more stable, uh, something that I can depend on more. So I’ve actually transitioned instead of buying those Non-performers I’ve transitioned to now I just buy the performing loans. So yeah, the returns are not as high, but way less work. And I don’t want to say no work, but if they’re making those payments, I’m just monitoring, making sure everything’s okay. I really only really have major work to do if somebody quits paying, and then I have to go to work and figure it out. But otherwise I’m just collecting those payments, which is really nice.

Trisha Stetzel: Okay. Yeah, the journey is much longer when you can engage with someone who’s making those payments on a regular basis. All right. Um, if people are already interested in learning more, just want to have a conversation with you, what is, what’s the best way for them to get in touch with you?

Nathan Turner: I think the best thing to do is to go through my website, Ernest Investing.com, and that’s E a r n e s t. So Ernest Investing.com, uh, there’s more information about notes and about how it works. I’ve got some little video clips from different podcasts and things. Uh, and then there’s, of course, the contact me, so feel free. I’m more than happy to have conversations with people and and explain it. I don’t do the teacher thing. Um, so I can hook you up with people that are happy to teach you the business. I but I’m more than happy to have a conversation with you and just kind of point you in the right direction and see what your priorities are. I see what you’re looking to do and then just talk shop. I love doing that. So feel free to do that. And, uh, and let’s chat and see how it can help.

Trisha Stetzel: Awesome. Yeah. Which makes which makes Nathan smile really big again. He’s like, yes, I love shop talk. Okay, speaking of shop talk.

Nathan Turner: Yes.

Trisha Stetzel: The whole reason I asked you to come back is because I want to know more. And I want to tell my audience about Diversified Mortgage Expo. So let’s start at the ground level. Tell us what it is, and then we’ll dig a little deeper and let the audience know more about how they can get involved.

Nathan Turner: Yeah, absolutely. So this is the fourth year that I’m running this. I actually, I need to adjust my bio because I wasn’t actually the founder of this. I gotta give props to the people that put it together initially. So this is the 11th annual this year coming up, uh, my fourth time running it. And it is just, it’s a conference for anybody and everybody who’s either interested in the note business or has already been involved in it for years and years. And it’s really interesting. We have kind of an informal survey at the beginning, and I just have people, you know, raise their hand and say, who’s brand new? And it tends to be about a third of the group are brand new. They’ve just just heard of this and thought, oh, wow, I gotta learn more about a third are people who have, you know, a couple of years under their belt, just still getting started and getting into it. And then the other third are the people that have been doing this for decades and have, you know, multi-million dollar funds and, and tens of thousands of dollars coming in every month because they’ve amassed their portfolio. And, and I love that we have that cross section because the guys that have been doing this for years and years are so friendly and so open and willing to share with those people that are brand new and, you know, wide eyed and what is this and how do I learn more? And it’s really fun to have that interaction having taken place just constantly.

Nathan Turner: And that’s really what it’s all about. It’s just a place. The whole idea, my whole vision for this, when I took this over, is a place where everybody can come network, learn, and then just grow the business. I don’t have anything I don’t there is no upsell for me. There’s no like, and if you join today, like we just I don’t have anything like that. I don’t want to. All I want to do is create that space where people can come together and get to know each other so that you can start doing deals. That’s, that’s my ultimate vision. Come people, come together, meet each other. And my favorite thing is to hear, oh yeah, we met at your conference and now we’ve done this and this together. That’s excellent. That’s perfect. That’s what I’m looking for.

Trisha Stetzel: It’s amazing. I love to hear that there’s such a diverse group or a diverse experience that is showing up for your expo. Tell us the dates for the 2026 Expo and where it is.

Nathan Turner: Yeah. So we are in Nashville, Tennessee. Uh, and it’s May 1st and second. So get it on your calendar. It, the thing is, I know it totally sounds like a pitch, especially since I run the conference. Uh, but I’ll tell you very honestly, when I first got started, 2009, I went to my first note conference and I was shocked. I couldn’t not believe that there was a whole room full of people that were talking about this thing that I’d barely heard of, and that’s when I started to meet people. That’s when I started to get connected with different people. And I’ve gone to o a dozens of conferences since then, and I without any word of a lie. That is how my business has grown, is just getting in that room and then talking to people and then partnering up with people, learning from others. Uh, that’s how it goes. And I, like I say, I know that sounds like a pitch because I’m like, oh, come to my conference, but, but that’s how the business works. And that’s how you get connected and that’s how you grow your business. And that’s 100% how that’s worked for me.

Trisha Stetzel: I love that. So Nathan, who should show up for this expo?

Nathan Turner: Yeah, we are looking for anybody who is either already interested in notes. And maybe you heard about it for the first time today and you thought, oh, that sounds cool. I’ve done some real estate. Uh, this sounds like something that would be interesting to add. I’m looking for people who, who have started to create notes on their own, where they’ve acquired property, and now they’re out there doing creative financing, seller financing deals. We’re looking for people who are looking to buy some of these loans. There’s a lot of us there that are looking for that. And then people who are obviously are looking to sell those loans. And then besides that, that’s kind of the crowd. And then we’ve got our vendors. So we’ve got our attorneys and we’ve got our service providers that the ones who actually take the payments on your behalf. We’ve got insurance people there. We’ve got IRA people there to teach us how to use IRA cash to do this business. Uh, and just everybody surrounding the business, we try to get everyone there. So that’s, it’s for everyone. But as far as participants, anybody who’s either interested in or has already started doing something with notes, creative finance or finance, this is the place to be.

Trisha Stetzel: I love it. Can you give me just an idea? The format? Is it mostly open and networking? People talking booths set up. Give me. Give me a little more.

Nathan Turner: Yeah. For sure. All right, so you come in. Uh, it’s a really great hotel. Like, I like the way they’ve got it set up. You come in and, uh, pass the front doors. There’s this huge atrium, and it’s just seating all over the place. So you can have these little private conversations with everybody in the restaurants right there in the bars right there. So you’ve got all this opportunity just to get together with people beyond that. Then we’ve got our vendor tables and we’ve got 19 different booths, uh, people who are, you know, advertising, whatever they’re doing, uh, and just letting you know who they are and what they’re doing. And then immediately behind that, that’s the ballroom. So we have a number of different speakers that come up. Um, one thing that we’re doing a little bit different this year that I think is going to be fun and interesting is we’re calling it head to head. So, uh, like I mentioned, when I first got started, I was all about non-performing loans. And just that was what I did and I was really good at it. And then now we’re into performing loans. So our session times are 45 minutes. So we’re taking, I think it’s 5 or 6 of those sessions and splitting them in half. So essentially 20 minutes and 20 minutes, we’ll have one person come up and talk to us about why this thing is the best. And then the other 20 minutes, something kind of opposite and say why their thing is the best.

Nathan Turner: So for example, we’ve got somebody going to be talking about non-performing loans and why non-performing loans are the way to go. And like, that’s the thing you should do. And then right after that, performing loans. And this is why that’s the coolest thing ever. And that’s why we’re doing that. And so we’ve got a number of topics for that, um, AI versus Vas, that kind of thing. Um, different things like that. We’ve got a session that’s, we’ve got some panel sessions, one that I’m particularly excited about where, um, if you’re looking to do the way that I do it, where you buy existing loans, we’re actually going to have a session where we’re going to throw up on the big screen, probably 4 or 5, depending on time, live deals like where these notes are actually available. And then we’ll have our panel of experts that are going to go through each deal and say, this is what I like, this is what I don’t like. Here’s, here’s what I would bid based on this criteria. So to give the audience an idea, both for those who are looking to buy the notes, what how to do that, how to go through and look at it and evaluate it and those who are creating notes that are looking to sell them so that they can get an idea of what the note buyers are looking for. So I think that one’s going to be a lot of fun too, but lots of other things besides.

Trisha Stetzel: Yeah, that sounds amazing. All right. So May 1st and second in Nashville, Tennessee, I heard through the grapevine that you’re still looking for a couple of sponsors or you have a couple of sponsor slots left open. Tell me more about that.

Nathan Turner: Yeah, we’ve got a few. We, um, we like to make this very interactive. And so we’ve got those booth spots, uh, and then we’ve got a few other kinds of different kinds of sponsorships. So for example, we’ve got, um, I think the ice cream one is still available. Funny enough, that one usually goes pretty quickly, but we have Ben and Jerry’s come in and serve everyone’s ice cream. And so somebody can sponsor that. And then you’re at the table right by the ice cream guys, and you can chat up everybody who’s coming through the line. Uh, things like that. So there’s, there’s maybe 8 or 10 spots left total, including the booths and everything else. Uh, the booths, I think we only have four spots left or something like that. So we’re getting close. But if you’re interested in, in doing some kind of sponsorship and you want to talk about what you’re doing and find a bigger audience, then definitely contact me and let’s talk.

Trisha Stetzel: Yeah. Fantastic. So is there a special website for the expo or should they just reach out directly to you?

Nathan Turner: Uh, there is so if you go to that earnest investing website, there’s a link over to diversified mortgage expo.com or you can just go to that one diversified mortgage expo.com. And then, uh, again, more information about that, the logistics and everything. Um, we have, you know, the copy of the agenda is up there if you want to look through and see if those topics sound interesting to you. And speakers as well. If you know anybody or if you want to learn more about who these people are and what they’re going to be talking about, all of that information is there as well. Actually, I’ll mention one more thing that is new this year. So I have my investment fund, the guys that set up the fund for me, uh, they are actually doing a special one day session the day before we start, so April 30th. So it’s a full day and they’re going to talk about these guys are, um, SEC attorneys. So they’re going to spend an entire day talking about raising capital, how to do that legally, how to do that ethically and how to raise as much money as you can to go and do whatever deals you’re doing, whether that’s notes or anything else. That’s their that’s their deal is helping you to raise capital. So that’s a special one day thing. That’s a separate cost, but it’s very inexpensive. And that’s all the information is on the website.

Trisha Stetzel: Fantastic. And of course you guys, I will put all of the links in the show notes so that you can just point and click if you happen to be at your computer, so that you can get in touch with Nathan or even learn more about diversified, the Diversified Mortgage Expo, which sounds amazing. Again, May 1st and second in Nashville, Tennessee. What else do we need to know about the expo? Nathan.

Nathan Turner: I think the thing that I would hope anybody who’s new coming to this, what I’d like them to know is it’s a very, very friendly group. They the first time I walked in back in 2009, I was so nervous. I didn’t know anybody. I didn’t know anything. Uh, I had a goal set for myself to give away 20 business cards. Like that was it. I didn’t want to learn anything. I didn’t want to do anything. I just wanted to give away 20 business cards, and I did. And then I did 20 more the next time and 50 more the next time. And you just start to meet people and talk to people. It’s a very friendly group. Um, you know, business casual, come and just enjoy. Uh, we do an ax throwing. Tournament the night before. Just to help break the ice and help people get comfortable and start talking to each other. But that’s what it’s all about. Just come and start talking to people and and learn what you can. And then we’ll see if we can add anything to what you’re doing and see if we can learn anything from you. And let’s learn and grow together.

Trisha Stetzel: I love that. Which is exactly why I asked you to come back on the show to talk about this, because it is something different. Like, you don’t have to be nervous walking in the door if you don’t know anything at all, because your audience is so diverse. And by the way, if you’re looking to diversify your portfolio, this might be a way to do that. Just do some discovery. And Nathan, this has been so much fun. It’s always fun to have somebody back for a second time because we already know each other. So we can just dive right in and have that conversation one more time. Tell us exactly where to go to get in touch with you.

Nathan Turner: So let’s, let’s put everyone to the conference. Let’s go. Excuse me. Diversified one more time. Diversified mortgage expo.com. That’s the place to go.

Trisha Stetzel: All right. Perfect. Nathan, thanks again for being on with me today.

Nathan Turner: Yeah. Thank you so much.

Trisha Stetzel: Absolutely. All right, guys, that’s all the time we have for today. If you found this conversation valuable with Nathan, please share it with a fellow entrepreneur, veteran or Houston leader ready to grow and maybe somebody who needs to diversify their portfolio. And be sure to follow rate, and review the show. It helps us reach more bold business minds just like yours and your business. Your leadership and your legacy are built one intentional step at a time. So stay inspired, stay focused, and keep building the business and the life you deserve.