Labrador Lending: 2020 in Review, Our Vision for 2021

2020 in Review

2020 was a rough year for many people. With a global pandemic and the resulting shutdowns, there was no shortage of economic hardship or related challenges. In the note-investing space, we saw a few months where there was essentially a standstill between buyers and sellers, and then things seemed to pick back up again.

Here at Labrador Lending, we were able to focus on slowly growing our portfolio while improving and refining a lot of our processes. We turned our attention to deal/process quality in lieu of transaction quantity; asset management over asset acquisition. As for the notes we did buy, they tended to be mostly strong, performing assets with a good bit of equity protection. Let’s take a look at some of our numbers from 2020.

Deals Done

As of January 1st, 2020, we owned 19 notes, after having just closed on 10 in December 2019. In 2020, we exited four deals: two low-dollar land contracts (CFDs) that were resulting in more work than profit, our joint venture (JV) deal with 7E Investments (our Nightmare on Elm Street), and our Jacksonville success story). As of today, we own 36 notes, and we are under contract to buy 1 more. All of this means we purchased 21 notes in the last 12 months, and 31 notes in the last 13 months.

Although we did enter into two joint venture deals in 2020 (bringing our active total to seven), in general we pivoted away from doing JV deals and toward selling partial notes. We sold 11 partials in 2020. For more information on partials, read here.

CFD Conversions

Another decision we made internally was to focus on converting our land contracts over to true notes. For more information on land contracts (a.k.a. contracts for deed (CFDs), read here. Although this can take away some potential upside for us, it also can remove liability and downside risk. True notes (non-CFDs) tend to be less work as well.

We are now down to 10 CFDs in our portfolio, after having converted 6 of them to notes in 2020. One of our goals for 2020 was to own more notes than CFDs and we met this goal.

Infinite Banking

One of the three fundamentals of this business is raising capital to buy more deals. In this post, we have already touched on JV deals and partials, which can be excellent ways to do just that. However, another potent technique we employed to fund our business in 2020 was the Infinite Banking Concept (IBC). If you’d like to read about how we do this, read here. This can be a powerful, often overlooked strategy.

Other Highlights

Some other highlights for Labrador Lending from 2020 were:

  • New states:  Among other states, we purchased loans in Georgia, Alabama, and New York this year, bringing the total number of states we have owned notes in to 11.
  • Georgia lending license: We were able to obtain our mortgage lending license in GA, something that is not inexpensive. Please reach out if you have GA notes to sell.
  • Forced place insurance: We have greatly improved our processes with regard to FPI and we continue to do so.
  • Workflow systems: We upgraded our Portfolio Activity Center subscription (through Podio) and will be able to automate more of our processes in 2021. If you’d like to learn more about how this could help you, go here.
  • Loan servicers: We went from one servicer (Madison) to four, and we are now down to three (Madison, Allied, FCI).

Podcasts and Virtual Events

Besides just doing deals and bettering our internal processes, we also grew the business in less measurable ways in 2020. For example, I was able to participate as a guest on several podcasts and as a speaker at virtual conferences. Here is more information on some of those:

In September, Chris Seveney asked me if I would like to join him as his co-host on his popular podcast, the Good Deeds Note Investing Podcast. Chris and Gail Greenberg had done a fantastic job of building up a committed, quality listener base, and Gail had turned her attention to other asset classes and other facets of life. I was honored to join Chris and we are having a lot of fun in the process. Stay tuned for some quality episodes to be released soon.

Family Life and Teamwork

For the past 12 months, my wife, Emily, has done a tremendous amount of work for our business. She has worked tirelessly on due diligence, document preparation/recording/storage, general asset management, and vendor coordination. Given the fact that she now must spend most of her waking hours focused on our kids’ education and their personal growth due to virtual schooling, she is unable to devote as much energy and time to our business. Enter Steven Burke.

For the final quarter of 2020, we have been blessed to have the organized and talented Steven Burke working for us. Steven approached me in June to see if we could use some help with our note business. At the time, we were not buying a whole lot and our kids were not in school (not even virtual), so we simply did not have the need. But Steven persisted and again offered to help in September. The timing was fortuitous. Emily was essentially homeschooling, and transactions had once again resumed.

A key point not to be overlooked is that Steven was looking to add value, and this time I took him up on his offer. Although he has limited time to devote to it, he is now doing an excellent job working in many facets of our business. ON the flip side, Steven has benefitted by working hands-on in our note business, gaining valuable education along the way. In fact, he is in the process of purchasing his first note! We just interviewed him on our podcast, so look for that to be released soon.

One contribution Steven made right out of the gate was to write this highly informative blog post on how passive investors can profit alongside active investors. Check it out!


Our Vision for 2021

Market Conditions We Expect

Given that our country just had an important election, and we simply don’t know when the end of the pandemic will be, there are still a lot of variables with regard to 2021 and the market conditions we will encounter. However, we are working with the expectation that there may be a slight uptick in mortgage notes available for purchase. With that said, we do not think there will be the massive surge in volume of non-performing notes that the industry experienced circa 2009-2012.

Business Goals

Our goals for 2021 are: (podcast episode on this to be out shortly)

  1. purchase 75 new notes, which would more than triple the size of our current portfolio;
  2. reach $100k in profits from notes (podcast on leaving your day job);
  3. start a note fund; and
  4. hire a business coach, specifically one who is not a note expert.

Further, we will continue to sell partials, and to automate and outsource. I am currently reading this book, and it has already had a big impact on my thinking. The theme for 2021 will be “Who, Not How.” We will be focused heavily on helping others reach their goals. We will add value to other investors, borrowers, vendors and the community writ large. Success and profit will follow.

Personal Focus

Personally, I plan to focus my own efforts more on leadership as opposed to being in the trenches, so to speak. Through my background in athletics, the military, and professional management roles, as well as an emphasis on family and faith, I have developed experience and a keen interest in leadership and teamwork. Here is a blog post I wrote in May 2019 about teamwork.

In 2021, I would also like to teach our kids more about entrepreneurship and personal finance, as well as involve them in our businesses more directly. If they earn income this way, we can start Roth IRAs for them. Something to consider.

Last, some associates and I also have some other undisclosed business plans for 2021, but you’ll just have to wait and see what happens there.

What are you looking to accomplish in 2021?


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