Marco Bario of Porch Swing Funding On Five Things You Need To Know To Succeed In The Real Estate Industry

An Interview With Jason Hartman

Curiosity is your Superpower

Some would say I left a creative career in television to move to real estate, which isn’t creative. That isn’t true.

Creativity is fueled by curiosity.

Curiosity led me to the first investors meetup I attended.

Today curiosity drives me to keep learning. I apply what I learn to investment strategies and developing solutions to seller’s problems (more on problem-solving in a moment).

As a part of my series about the ‘Five Things You Need To Know To Succeed In The Real Estate Industry’, I had the pleasure of interviewing Marco Bario.

Marco Bario is the President of Porch Swing Funding, where he purchases mortgages created when home owners sell their home and agree to accept payments over time (seller financing). Before becoming a mortgage note buyer, he worked in the Hollywood entertainment industry. Moving from the world of storytelling to helping people with their real estate journeys is something he wishes he had begun earlier in life.

Thank you so much for doing this with us! Can you tell us the “backstory” about what brought you to the Real Estate industry?

It wasn’t a straight path. Growing up, I wanted to make TV shows. I was obsessed with it. That led me to Emerson College, where I studied Television Production. A week after graduation, I moved to Los Angeles, ready to pursue my dream.

I worked up from Production Assistant to Producer. I loved the work and the experiences, but every show is at the mercy of the ratings. So much of ratings success is luck and timing. Unfortunately, I never won the hit show lottery, and my life as a freelancer meant never knowing when the next opportunity would be. That was stressful.

One day, a connection said he knew of a position with Technicolor–the company that invented color motion picture film. By then, they also provided digital post-production and content distribution.

At that point, I was married and expecting a baby. A regular job sounded like a smart idea. I joined Technicolor’s sales team focused on television services.

Our business and my role grew while I was there. I got a taste of managing a “profit and loss statement” and other valuable experience. I also got the entrepreneurial bug. But I realized I wasn’t cut out to work for a big company.

Real estate came about during the search for “what’s next?” I found a local real estate investing meetup. Each month, different panelists discussed different real estate investment strategies.

One month, several people shared how they invested in debt secured by real estate rather than owning property directly. It’s real estate without tenants, toilets, and termites.

That’s what I do today. Essentially, I’m the bank. Mortgage note buyers purchase existing mortgage notes and collect the monthly payments.

Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or takeaway you took out of that story?

The mortgages I buy today are seller-financed. A homeowner sold a property and agreed to accept payments from the buyer in installments.

When I buy these, rather than sending a letter after I buy, I find it’s better to have a conversation before with the person making payments.

There was a mortgage note I bought secured by a property in Oklahoma. I intended to phone the “payer” before we closed, but it was a busy week. I dropped the ball.

So, I called him after buying the note, The conversation went like this:

Me: I introduced myself and said the person he’d been making payments to sold the remaining balance to me.

Payer: [very agitated] “HE DID WHAT?”

Me: I own the note now. I was under the impression the seller alerted you he was selling it.

Payer: “WHERE ARE YOU CALLING FROM?”

Me: I’m calling from Porch Swing Funding in California.

Payer: “CALIFORNIA?? CALIFORNIA?? ……. [EXPLETIVE] [EXPLETIVE] [EXPLETIVE]”

then… That was the entire call. He hung up on me.

He never sent a payment or replied to other attempts to reach him.

I had to file for foreclosure, which is expensive and takes time.

Months into the legal process, a check appeared in my attorney’s office. It contained a full payoff of the remaining balance plus interest and fees. All I can assume is the payer didn’t want to be in business with someone from California–so much so that he wrote a big check to make me go away.

If I’d taken time to call before I bought the note–either he would have appreciated I took the time to tell him what was in the works, or he would have reacted poorly then, and I might have reconsidered the purchase.

In real estate we don’t skip steps. I skipped one here. It cost me time and money.

Do you have a favorite “life lesson quote”? Can you share a story or example of how that was relevant to you in your life?

It’s this Theodore Roosevelt speech:

“It is not the critic who counts: not the man who points out how the strong man stumbles or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes up short again and again, because there is no effort without error or shortcoming, but who knows the great enthusiasms, the great devotions, who spends himself in a worthy cause; who, at the best, knows, in the end, the triumph of high achievement, and who, at the worst, if he fails, at least he fails while daring greatly, so that his place shall never be with those cold and timid souls who knew neither victory nor defeat.”

My takeaway…

Entrepreneurship is personal growth. My growth comes from not giving up, getting a little better each day, and realizing the most important person to please is me.

Are you working on any exciting new projects now? How do you think that will help people?

I’m happy you asked about this. My amazing girlfriend and I are launching a business to acquire and manage a portfolio of rental homes in Frederick County, Maryland, where there is a shortage of rental homes.

Our approach is unique in two ways:

1. We’re happy to add properties to our portfolio through extended leases of 2–5 years, or via traditional ownership. So many current housing providers dislike the hassles of self-management and have been disappointed by property managers. Extended leases in our position are unique and benefit the property owner. By making such a commitment, our interests are very much aligned.
2. We find people to live in our homes who will take care of the property, be good neighbors, and, of course, pay the rent on time–then we basically leave them alone. It’s a different mindset. Our application includes questions like, “What tools do you own?”
3. We ask renters to be responsible stewards of our properties and provide them incentives to do so. Our vendors and contractors are available to them. We aren’t checking up on them. They have more freedom than in a typical rental situation. We know from others who have implemented similar strategies it leads to longer-term tenancies and homes turned over to future residents in better condition.

What do you think makes your company stand out? Can you share a story?

When most people think about mortgages, they think of Wall Street. But my focus is Main Street.

People I buy notes from are everyday people–not financial pros. They sold a property and agreed to accept payments. They collect payments like a bank, but the comparison stops there.

Here’s a story that gets to me every time. It drives home the “Main Street” not “Wall Street” nature of my business.

A very nice woman called, saying she had a note to sell.

She and her husband sold their home to her son and his new wife. They agreed to accept payments rather than the young couple trying to qualify for a bank mortgage.

I asked why they decided to sell the note now.

The mother shared that her son grew up with emotional challenges. He continued to struggle as an adult. After several years in the home, he took his own life. We’d been on the phone only 15 minutes when she told me this.

I asked if her son’s widow continued sending payments. She did and had been for a couple of years. But the relationship between her and the boy’s parents wasn’t good. They wanted to move on.

This story is unique, but sellers sharing their personal stories is not.

Someone I admire who is also a mortgage note investor has a saying: “There’s a heartbeat in every home.” I find a connection to the stories behind the notes I buy and the people who share them.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

There are dozens of people, and the list continues growing.

The first ones would be people like David Coe, Matt Owens, and Jeremy Roll, who were the first real estate investors I met and who hosted the first investor club meetings I attended.

They provided education by sharing their experience, ideals, and ideas–and introducing me to others who shared similarly. They also modeled being full-time investors, which provided something to emulate.

Through that network I met and heard of others who I began to follow and learn from. I could diagram it like a family tree. By now, it would be very large.

I still take classes and attend workshops and conferences. I enjoy learning in general, especially learning new ways to help people with their problems. That makes me more effective.

I advise new investors to join one or two real estate investor groups and ask who provides value when it comes to education. There are $50,000 mentoring programs. I don’t recommend those. Look for the (often) veterans with gray hair who teach for free or very little simply because they want others to find the success that they have.

Ok. Thank you for all that. Let’s now jump to the main core of our interview. Can you share 3 things that most excite you about the Real Estate industry? If you can please share a story or example.

1. I have the opportunity to connect one-on-one with people all over the country. — It’s so much fun to learn about different people, their lives, jobs, hobbies and the areas where they live.
2. People share their personal stories with me, and I get to help them move their stories forward. — Mortgages I buy were usually created during some transition in a person’s life, and they usually wish to sell during another transition. Life creates the most interesting stories.
3. I’m able to support people buying and selling homes without banks or Wall Street. Big lenders love for us to believe they’re the only option. It’s not always true. Every year, there are about $1.5 billion in seller-financed real estate transactions.

Can you share 3 things that most concern you about the industry? If you had the ability to implement 3 ways to reform or improve the industry, what would you suggest? Please share stories or examples if possible.

There was a 2019 Federal Reserve survey that found the median net worth of families who are homeowners is more than 40 times greater than families who are renters. (source here)

But It’s getting harder and harder for people, especially when starting out, to buy a home.

1 . Not every buyer or property fits in the box that banks require in order to qualify for a mortgage.

Seller financing is the answer for some buyers. These are deserving buyers who own a business, work seasonally or may be getting back on their feet.

And these are properties that need work, have manufactured homes, or lower values banks don’t like to finance.

Congress passed the “Dodd-Frank Wall Street Reform and Consumer Protection Act” in 2010. Although it was intended to regulate mortgage lenders who caused the Great Recession, it also set limits for people offering real estate seller financing.

There’s a group, the Seller Finance Coalition, that is working with Congress to create more carveouts for seller financing. If successful, it will create more opportunities for people to become homeowners.

2 . In 2019, Rocket Mortgage spent $905 million on marketing. We’ve reached the point where too many people assume there’s only one way to buy a home.

There’s a place for big lenders but also for seller financing. And I’ll throw in a plug for community-based lenders like local banks and credit unions. They’re important too.

Each type of financing serves different people and circumstances. Knowing the options is in the public’s best interest. The better job we do letting buyers and sellers know they have options; the more people can own homes and create financial legacies.

I publish a newsletter to educate housing providers and investors about seller financing. I’d love to see more of this from our industry and support from elected officials to support community banks and educate the public about options such as seller financing.

3 . Affordable housing is a popular topic, but I don’t see much progress.

When the Fed reacted during the pandemic by lowering interest rates and printing more dollars, it pushed up the prices of hard assets like real estate.

Also, thanks to low rates, more than 80% of homeowners have mortgages with an interest rate below 5%.

The problem is that these loans aren’t assumable, and they can’t be carried over to another property. When someone moves, they have to get a new mortgage at higher rates. When a new homeowner looks to buy, they can’t assume a seller’s low-rate mortgage.

We have a housing market in gridlock. No one wants to move or to start from scratch. If more mortgages were assumable — or could be walked by the homeowner to a new property, we’d have a different and more affordable housing market.

What advice would you give to other real estate leaders to help their teams to thrive and to create a really fantastic work culture?

Technically, I’m a solo entrepreneur, but I began to find success when I realized real estate is a team sport.

Success has come for me through networking, sharing knowledge, and actively learning. Scarcity mindsets are deadly. Entrepreneurs who believe they hold all the secrets stumble once market conditions shift or legislation changes and their strategy no longer works. They aren’t growing, and they can’t pivot because they’ve operated in a bubble.

My team includes other investors, real estate professionals, attorneys, and teachers. When I can, I bring others into my deals so we can lean on–and learn from one another.

Ok, here is the main question of our interview. You are a “Real Estate Insider”. If you had to advise someone about 5 non-intuitive things one should know to succeed in the Real Estate industry, what would you say? Can you please give a story or an example for each?

1 . Curiosity is your Superpower

Some would say I left a creative career in television to move to real estate, which isn’t creative. That isn’t true.

Creativity is fueled by curiosity.

Curiosity led me to the first investors meetup I attended.

Today curiosity drives me to keep learning. I apply what I learn to investment strategies and developing solutions to seller’s problems (more on problem-solving in a moment).

Jimmy Napier wrote a book called Invest in Debt. He was an investor and teacher who taught about the “deal after the deal.” From him, I’ve learned that I can purchase a note, and after making that deal, I can make other deals with the person making the payments that increase my yield.

For instance, did you know that agreeing with a payer to halve their interest rate in exchange for doubling their monthly payment will decrease the total amount they pay for the duration of their loan and increase my yield?

2 . Bad outcomes hurt the most and teach the most.

Growth is imperfect.

I shared how I skipped talking with a payer before buying a loan. It cost me money and taught me a lesson.

Another time, I purchased a non-performing note (it was delinquent… the payor had stopped making payments). I bought the note knowing there were several situations I hadn’t dealt with before but eager to learn as I found my way through.

It’s strange to me, and I learned this on this deal, but some payors who sign an agreement to pay a debt reach a point where they feel they shouldn’t be forced to repay. At one point in handing this note, I received a call from two deputy sheriffs. The payer (who wasn’t making payments) filed a complaint stating I had broken the law by pursuing foreclosure and contacting her senior lien holder. The call with the deputies lasted five minutes, I never heard from them again, and with court approval I ended up owning this person’s home.

3 . EQ > IQ

Entrepreneurship is personal growth. The more I know about myself and work on growing personally, the more effective I am.

When the payer I mentioned earlier cursed me out and hung up on me when I told him I’d purchased his note, my inclination was to take it personally.

However, some self-reassurance and reviewing the details with my loan servicer helped to ease my doubts and calm my emotions.

If you aren’t ready to accept charged moments and moments of self-doubt, you aren’t ready to become an entrepreneur.

4 . Real estate is about people, not property.

In television, we made episodes for audiences. In real estate I make solutions for problems. The two are similar.

Television episodes are broken down into scenes. Real estate problems are broken down into scenarios. Both are story-driven.

Real estate stories (problems) involve:

• Death
• Divorce
• Financial issues
• Job Changes
• Discomfort
• Financial Burdens

There was the story of the parents whose son took his life. I hear from sellers who want to live closer to grandchildren, fell on hard times, or dislike the person they’re collecting payments from.

Every human has a story. I need to understand their story to solve their problem.

5 . Money comes from solving problems

When you’ve got knowledge and maybe experienced a few hard-learned lessons…

and the leads come in…

and you listen to people’s stories…

and understand their problems…

The opportunity to make money is near.

Real estate entrepreneurs solve people’s problems for money.

When I remove the burden of a mother and father dealing with their son’s sad legacy, I’ve solved a problem.

When I help someone sell a note they structured incorrectly so they can sell it and qualify for medicare benefits, I’ve solved a problem.

Or, when I help someone sell a note so they can invest in a business opportunity, I’ve solved a problem.

Focus on benefits for the people you help:

Relieving stress… putting money in their pocket… improving their lives.

Because of your position, you are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. :-)

I watched a movie over the holidays, “The Bank of Dave.” In the story, Dave lives in a small town in England. Banks were large and London-centric. There was no local bank to invest in Dave’s local community.

Dave is a successful businessman and makes loans to locals when he can. But he can’t make all the loans that are needed. He’d like to start a bank in town to support growth and strengthen the community.

Of course, he faces hurdles. Established banks run the regulation board whose approval he needs. They don’t want competition and set out to stop him.

You’ll have to watch the movie to see how it turns out.

Today… local banks are struggling. Big banks are in line to take them over. I’d like to see Americans push back against money influence and the erosion of local financing.

Seller financing is another form of this. I hope we see success from the efforts of the Seller Financing Coalition and that legislation is passed to make seller financing easier.

How can our readers further follow your work online?

Through my mortgage note-buying website: Porch Swing Funding

Thank you for your time, and your excellent insights! We wish you continued success.

About The Interviewer: Jason Hartman is the Founder and CEO of Empowered Investor. Jason has been involved in several thousand real estate transactions and has owned income properties in 11 states and 17 cities. Empowered Investor helps people achieve The American Dream of financial freedom by purchasing income property in prudent markets nationwide. Jason’s Complete Solution for Real Estate Investors™ is a comprehensive system providing real estate investors with education, research, resources and technology to deal with all areas of their income property investment needs. Through Jason’s podcasts, educational events, referrals, mentoring and software to track your investments, investors can easily locate, finance and purchase properties in these exceptional markets with confidence and peace of mind.

Starting with very little, Jason, while still in college at the age of 19, embarked on a career in real estate. While brokering properties for clients, he was investing in his own portfolio along the way. Through creativity, persistence and hard work, he earned a number of prestigious industry awards and became a young multi-millionaire. Jason purchased a California real estate brokerage firm that was later acquired by Coldwell Banker. He combined his dedication and business talents to become a successful entrepreneur, public speaker, author, and media personality. Over the years he developed his Complete Solution for Real Estate Investors™ where his innovative firm educates and assists investors in acquiring prudent investments nationwide for their portfolio. Jason’s sought after educational events, speaking engagements, and his popular “Creating Wealth Podcast” inspire and empower hundreds of thousands of people in 189 countries worldwide.

While running his successful real estate and media businesses, Jason also believes that giving back to the community plays an important role in building strong personal relationships. He established The Jason Hartman Foundation in 2005 to provide financial literacy education to young adults providing the all-important real world skills not taught in school which are the key to the financial stability and success of future generations. We’re in a global monetary crisis caused by decades of misguided policies and the cycle of financial dependence has to be broken, literacy and self-reliance are a good start. Visit JasonHartman.com for free materials and resources.