It can also be the most difficult. Why?

Well it can seem a lot like looking for the proverbial needle in a haystack.

The Challenge with Real Estate Notes

On average about 6% of residential real estate sales involve some sort of seller financing. And it’s the seller carry-back that makes up the lion’s share of the cash flow note business.

Now it can be more or less depending on where you live. It’s also higher in a tough economy (like now) or with hard to finance properties (land, mobile homes, commercial, businesses, etc).

But that 6% has been a pretty reliable statistic for the 20+ years I’ve been buying and selling notes. I know six percent may seem like a small number but it can really add up.

Cash Flow Note Statistics

Just take a look at residential sales for one year. In 2009 there were 5.156 million existing home sales units with a median price of $172,500 [Source: National Association of Realtors®].

If we apply the 6% seller financing average that results in roughly 53.3 billion dollars of cash flow notes created in just one year. That number grows substantially when you combine with the notes created on new homes, land, mobile homes, business notes, and others not included in this NAR report.

So how do you find the needle in a haystack?

Target Marketing – The Solution to Finding Mortgage Notes

It’s a waste of valuable time and money to market your note buying services to the 94% of the population that don’t hold a note.

To find cash flow notes you need a powerful magnet…and that’s targeted marketing.

A marketing plan targeted solely to the needs of sellers holding cash flow notes is what will get your phone ringing and your pipeline full of deals.

5 Ways to Find Cash Flow Notes

In our business there are 5 preferred methods for locating deals. We cover this in more detail in the Finding Cash Flow Notes Videos (click the link  for free access to the mini course), but to summarize they are:

 1.  Ads – Using ads to find people receiving payments on real estate notes

 2. Direct Mail – Sending letters or postcards to a verified list of note holders

 3. Referrals – Networking with professionals to obtain referrals

 4. Online – Building an online presence with websites, directories & SEO

 5. Building Your Brand – Establishing yourself as an expert in your local area

Over the last two decades we have used a combination of all five methods.

So what’s the best way to find cash flow notes?

Well that depends on three things:

1. Budget

How much are you able to spend on marketing? This is a huge factor when first starting out. For example direct mail is effective (if done right) but also expensive.

2. Time

How much time can you devote to the business? Reverse Ad Marketing and Referrals are low-cost but they take an investment of time.

3. Skills

What are your strengths and weaknesses? Do you already have relationships with existing real estate professionals? Are you great with computers? Do you like (or hate) to give presentations? This also impacts your selection.

So start with the 5 main methods, realistically assess your budget, time, and skills, and then make a marketing plan that is best for you.

To get more details on our five favorite methods for Finding Cash Flow Notes watch this special free video:

You can also read these additional articles on:

Finding Cash Flow Notes

Note Broker Questions: How Do I find Notes on a Budget?

Should I Visit the Courthouse to Find Cash Flow Notes?

Find Cash Flow Notes with Note Seller Lists

Seller Financed Note Business Increases 40%!

What about finding cash flow notes?

First off, let’s look at some of the top social media sites in 2010 (in no particular order).

YouTube  -  Twitter  -  Flickr  -  Digg  -  Facebook  -  Del.icio.us  -  Propeller

Reddit  -  Metacafe  -  Technorati  -  StumbleUpon  -  LinkedIn  -  Mixx  -  Slashdot

My Space -  Class Mates  -  LiveJournal  -  Yahoo 360  -  Scribd

Blogger  -  WordPress  -  MSN Groups

Wow, where do you start?

There are really over 100 social media sites that have “significant traffic.” But you certainly don’t have the time to check them all out. Here are a couple that we think deserve your attention.

1.     LinkedIn – Touted as the “business” option for social media, you can connect with colleagues, clients, and prospects. You can send and receive emails as well as create and join groups.  Think business networking groups in an online environment.

2.     YouTube – Great venue for sharing videos and a low price (how is free for low?). Be sure to allow people to re-post your video on their site if they want to share.

3.     Facebook  – Ever since the addition of Fan Pages and Groups, Facebook has become a potential melting pot of information. If you use the “group” function you can also email people (within Facebook) directly. A great way to let them know what you are doing.

4.     Twitter – Short messages to a group of “followers.” This venue gives the user and opportunity to add a personal touch. Just don’t go too far – no one cares what you had for lunch. Send out more than 4-6 updates per day and you will probably find your followers start to ditch you – especially if you are doing nothing but selling them.

Although the jury is still out on how many actual deals you can get from social media, there is no question that it will be here for awhile and millions of people are interacting in this venue.

In all cases, you want to be sure that you are delivering useful content, not just a sales pitch (some sites will even have rules against you doing just that). Contribute solid information and you just may find yourself sought out when it comes to buying owner financed notes!

We’re pretty sure mailing 50,000 note holders per month qualifies.  Get all the details in our exclusive Note Investor (NI) interview with Scott Arpan of Advanced Seller Data Services (ASDS).

NI: What is the current focus of your company?

We strive to be the premier supplier of lists for seller carryback notes used by the nation’s top note brokers. Our list of note holders is the only product we have ever sold and rely on its integrity to remain in business. We are always reviewing our proprietary programs to pull more and higher quality leads then anyone else in addition to providing more ancillary services for the note broker.

NI: How did you get your start in the note business?

Scott Arpan of ASDS: My father Larry entered the note business in 1990 as a broker. I joined him in 1994 as the business prospered. We were one of the larger note brokers in the country based on the volume of deals we supplied to the two largest note buying companies at the time. Our primary resource to locate notes was a mailing a list we developed after being frustrated by the companies selling note holder lists focused on data for title companies, Realtors and mortgage brokers and they did a poor job makings lists for our little niche industry they did not understand.

My father retired in 1999 and I took the business a new direction a few years latter, investing in non-performing notes solely for my own account. Meanwhile I had a system to collect note holder names in over 2000 counties which became Advanced Seller Data Services.

NI: What unique benefits does your company provide?

We are the only list vendor with hands on experience mailing note holders and we pass on our experiences and expertise to our customers for free. We mailed up to 50,000 note holders per month providing us with special insight how to run a profitable mailing campaign most note brokers do not have. Ten unique benefits of our company are listed on our website notesellerlist.com.

NI: What type of transactions will your company consider funding?

For the past seven years I have split my time between creating our note broker mailing lists and buying non-performing notes. The only notes I am interested in are defaulted or otherwise high risk notes I feel comfortable taking through foreclosure, repairing and selling. Currently, I only want notes in Oregon or Washington, preferably near Portland. Most offers I make are between 25 and 40 cents on the dollar for full purchases.

NI: What do you consider the best methods to find cash flow notes?

Brokers must use a multi-pronged marketing approach to finding notes. While I would love to have brokers spend all of their money on my lists, they are better off in the long run developing a website and mailing note holders. Direct mail will inform note holders of your services and spark an interest in your company without a search engine redirecting them to a competitor. The website will give a note holder a greater depth of information about your service and why they should trust you.

In the long run I believe, and research has supported, highly targeted mailing lists are cheaper then developing a website and going to the expense of pay per click and other methods for obtaining a high page ranking. While a high ranked website may draw more note holders, direct mail can focus on notes you can actually close with much less competition.

NI: What advice would you give to new professionals just starting out in the cash flow industry?

Control anything about your business within your control and learn to adjust as markets change and you develop your business acumen.

1) Have a vision and budget to guide you. – Develop a plan how to start your business slowly and build momentum as you learn and improve from experience. Also, know where every dollar is spent in your budding company and use your resources as efficiently as possible. For brokers interested in developing a direct mail campaign, I offer a free simple budgeting program to help you get started.

2) Build trust. – A note is usually the most valuable asset a person will hold. Note holders owning other valuable assets are less willing to sell their note at a reasonable discount then those with no other financial alternative. Nobody will sell a valued possession to anyone they can not connect with personally or have doubts about their character. You must also develop trust from the investors you work with. Treat everyone you work with like they are your family.

3) Have a marketing message that attracts profitable note holders. – Your message to the note holder must convey trust and motivate them to contact you. I have seen very smart and experienced brokers fail to attract prospects because their message was bland, boring, redundant, or way off point. Your image and message are your only “hook” to bring sellers to you. I have several articles on my website how to develop a message. This topic is so important and vast that I can provide your readers even more valuable information.

NI: What is the most common business mistake you see people make in the cash flow note business?

As a list provider I see over confidence and lack of confidence in a marketing plan as the biggest cause of failure. When brokers are either overconfident or under-confident with their business plan they act in ways detrimental to any business.

Overconfident brokers fall in love with their marketing plan and will not consult outside sources or listen to their customers about changes necessary to make their marketing plan effective.

These brokers believe they have more talent or special insight over other brokers to attract every note holders and their business will automatically prosper accordingly. Most end up delivering subpar messages to note holders that do not produce and grow frustrated because they don’t know what they don’t know about marketing.

In truth, new brokers need to expect lower response and closing rates starting out and see improvement and higher profits as they gain experience, knowledge and insight to what motivates note holders to call. Successful brokers listen to what note holders are telling them (sometimes by silence) about their message and change accordingly. Every note broker who earns a very good living today started modestly and continued to learn as any entry level person would for all other professions before they mastered their craft.

Under-confident brokers usually come to me after their first mailing failed. Either the delivery of their message was poor or they mailed a list that came from: 1) a company supplying free lists that pretty much provides the same name to many brokers; or 2) list sellers charging astronomical prices and promise an “exclusive” note holder name that is not exclusive; or 3) list sellers who focus on working with title companies, mortgage brokers and Realtors and do not clean their list before selling it to the unsuspecting note broker.

The ones from this group who eventually succeed can step away from their disappointment and logically analyze what went wrong. The great thing about direct mail is its ability to be precisely measurable so problems can be identified and fixed.

NI: What sort of changes are you seeing with real estate notes in the current economy?

We see many more quality notes being created in the past year. Seller financing is a more viable option now then anytime in the past decade. As real estate agents, sellers and buyers discover the benefits of seller financing we will see even more of a boom. I believe now is the best time to enter the note business since the mid 1990’s.

NI: Where can someone contact you to obtain more information?

They can call me at 800-992-4536, e-mail me at scott@notesellerlist.com, or visit our website NoteSellerList.com which I update with new marketing information regularly.

But how do you create a list of people interested in selling cash flow notes?

Here are three methods for building your list:

Method #1- DIY County Records

When a property is owner financed the documents are usually recorded in the county records. These records are available to the public and can be viewed in person at the county recording office. Even better, many counties now offer access to records online.

What are you looking for?

The first step is to identify a transaction where the party receiving payments is an individual and NOT a bank or mortgage company.

Next, copy down their name, mailing address, property address, and amount of the real estate note. Depending on the documents recorded, this will be:

Mortgage – Mortgagee is receiving payments on cash flow note

Deed of Trust – Beneficiary is receiving payments on real estate note

Land Contract – Seller or Vendor is receiving payments on a contract for deed

The Do-It-Yourself approach is a tedious and time-consuming way to find cash flow notes. Keep reading for some simpler list building strategies.

Method #2 – List Service

There are list services that do all the grunt work for you. Actually, they use computer software to download the information directly from the county records. For as little as 12 cents a record you can import the data into an excel spreadsheet and be ready to print mailing labels for your postcards or letters.

A word of caution – verify the list service is a direct provider that supplies mailing lists for a variety of real estate professionals. Here’s a link to the company we personally use to find cash flow notes.

I’ve spent endless hours going through dusty courthouse records and hands-down prefer using a list service. The only time I’d consider the DIY method is for one of the few counties that are not offered through a reliable list service.

Method #3 – Email List

Another option is to forget the snail mail and start building an email list. Visitors to your web site can opt-in to receive your free monthly eletter. To encourage participation offer a free downloadable report, with helpful tips on increasing the value of their real estate note.

The months of September through November are some of the busiest for buying and selling cash flow notes. Use these dog days of summer to build your list and start the fall season off with a strong marketing campaign.