Real Estate Nerds 57 | Asset Protection for Real Estate Investors : Royal Legal Solutions

Real Estate Nerds 57:

Bad Beats

"Nonperforming Notes and Sovereign States"

Scott Carson
Real Estate Investing Expert
Real Estate Nerds
Episode 57: "Bad Beats"

Listen to the Podcast Here:

In todays episode of “Real Estate Nerds”, the Scotts (Smith and Carson) meet together to talk about a ‘Bad Beat’ S. Carson encountered earlier in his career. Scott Carson has been actively buying notes on residential and commercial properties since 2005 but this one stood out as a particularly tough deal.

Nonperforming Notes and Sovereign States

Introduction and Scott Carson’s background

[3:00] Intro to the ‘Bad Beat’ featuring 11 notes in Chicago.

[5:10] Scott Carson talks about the trouble he had with evictions, including:

  • A gun being pulled on a process server.
  • A tenant declaring his dwelling a ‘sovereign state’
  • $250,000 in attorney fees

[9:13] Scott Carson talks about the lengthy legal proceedings involved with this deal.

[12:15] Scott Carson talks about how to maintain good relationships with investors and what repayment of investors looked like.

[16:00] Scott Carson talks about his 5 cornerstones of conducting business:
  • Buying first lien only
  • Below market value
  • Insuring the property
  • Proper paperwork/Legal assistance
  • Wire to a bank not to you directly

[17:38] Scott Carson talks about what his drive for wealth accumulation is and his passion for educating others

[19:35] Scott Carson talks about his goal to educate and create 10,000 note investors over the next 5 years.

[23:57] Lesson Learned

Listener Resources

Thank you for joining us on today’s episode of the Real Estate Nerds Podcast. For even more free educational resources on real estate investing and the law, check out the Royal Legal Solutions blog. You can also reach our host Scott Smith directly, connect with him on LinkedIn, subscribe to the Royal Legal Solutions YouTube channel, or join our investor community on Facebook.

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About Scott Carson

Scott Carson is the owner and managing member of Inverse Investments LLC, and a Austin based, defaulted note buying company. He specializes in finding non performing notes on residential and commercial properties and purchasing these notes for his portfolio. He also teaches Note Buying For Dummies, a 4 day workshop for investors on buying defaulted notes. He has been an active real estate investor since 2002 and purchase real estate all across the country. He also speaks on a regular basis on real estate investing, defaulted mortgages, short sales, marketing, and raising private capital.


Connect with Scott via his email and website:


When making business decisions that affect your long-term goals, like what types of investments to make with your retirement dollars and which vehicles to use, it really is best to be aware of all of your options. We frequently talk about the Solo 401(k) and Self-Directed IRA as tools for funding your retirement. But what about life insurance? And what about the stock market? What if we told you there is a tool that allows to to reap some benefits of both? It’s called Indexed Universal Life Insurance–and some investors have found it a useful addition to their retirement plans.

What Is Indexed Universal Life Insurance?

Indexed Universal Life Insurance (IUL) plans are a variety of permanent life insurance plan that features a cash-building element. One primary benefit of these plans is that the policy holder gets some of the gains of being associated with the stock market without all of the risk Wall Street is famous for. This is in no small part because of how these policies are designed. IULs earn in part because they are directly linked to a market index, such as the Dow or the S&P 500.  Any gains remain within the policy, albeit a cap rate will limit how much you can make. However, you are protected during a particularly bad year for your index with an IUL. The worst case scenario with these plans is that you make nothing, but you never actually lose money no matter how poorly your index performs. The protection of your principal is actually derived in part from the same cap rate that limits your gains.

How much money do policyholders stand to make? Historically, returns run between 5-9%. The S&P Index has actually returned at 9-11%, but the upside limit on UILs stems from the account’s cap rate. For this reason, many advisors argue that the UIL can make a wise addition to a retirement or estate plan once more traditional and self-directed accounts are maxed out.

Tax Benefits of Indexed Universal Life Insurance (IUL) Plans

There are three key tax benefits of IULs. First, you may pay into the policy with pre-tax or after-tax funds. Withdrawals from the policy may be made tax-free if you are under 59 1/2. Such withdrawals are regarded as loans, with your death benefit serving as collateral. Any funds paid out to the beneficiary are also tax-free, including normal benefits upon your passing. This is true regardless of their value.

Ask the Experts at Royal Legal Solutions About Your Retirement Planning Options

Regardless of where you are in the retirement planning process, Royal Legal Solutions an assist you. We have extensive experience educating investors about self-directed investment options. Many of our investor-clients love our Solo 401k information, product, and compliance services. Our Self-Directed IRA services can also be helpful for retirement planning, as the SDIRA is yet another vehicle that allows you to diversify and take total control of your investments. To determine which of the available retirement planning strategies are best for you, consult with one of our experts at Royal Legal Solutions. You may also contact us with any questions you may have about your options.