Granted, those signs have always been popping up, but now that you are in the note business you begin to see some additional opportunities.

But are they good opportunities?

The existence of a “For Sale By Owner” sign does not necessarily equal a potential cash flow note deal.

If anything, it may be a distraction.

Let me explain.

1.  “For Sale By Owner” does not mean the seller is willing to owner finance. It just means that they are attempting to sell the house without using the services of a Realtor. It could be they are trying to make a few extra bucks. If that is the case, they will most likely not be interested in carrying back a note (and then selling that note at a discount).

2. “For Sale By Owner” does not mean they have the ability to carry back a note. In other words, there is no guarantee the seller has enough equity to make for a viable note sale. It is more likely they have a large underlying lien (bank loan) that they need to pay off. Could be another reason they are trying to cut out a Real Estate Agent and keep the fee.

3.  Sometimes the reason someone is selling “By Owner” is that they did not believe the real value their home was worth. A real estate professional may have told them what the value was, but the seller is trying to sell for more than that (above the fair market value).

4.  Just because the property is for sale by owner, does not mean that the potential buyer has any need for owner financing. The sale could end up involving a bank loan or even a cash sale. In either case, there never would be a private note created; to be later purchased/brokered.

5.  At this point, there are very few Note Buyers that are interested in a “simultaneous closing.” A simo is where the Funder purchases the note without any seasoning (or payments having been made). Many people want money now – which is why they are more apt to take a slightly lower cash offer than deal with the hassle of selling a note later.

It is not that “For Sale By Owner” properties do not have the potential to be notes – some do. But most do not.

Do you want to spend your valuable time looking for notes that are already in existence or do you want to spend your time looking for deals that may be created.

I spent a lot of time with “For Sale By Owners” when I was first starting out.

It was a great experience builder and my best financial calculator got quite the workout. But in the end, I would guess I only closed 1 out of 100 people that I actually spoke with. (1 out of 500 that I contacted and never heard back from). And that was during a time that simultaneous closings were popular – those numbers would be even less now! (See the article Selling Mortgage Notes: Where Have All the Simos Gone?).

If you do come across a “For Sale By Owner,” it is a good idea to simply let them know what you do.

Don’t spend a lot of time – again a note may never be created. Send the seller a card or direct them to a an article on your note business website. Keep them on your radar and see if the property sells with some sort of owner financing. If it does, now you have something to work with. Or improve your odds by targeting sellers that have already indicated they have an interest in offering seller financing (see the article Finding Mortgage Notes with Reverse Ad Marketing).

Focusing your marketing efforts looking for existing notes (as opposed to notes that may be created) will always yield better results…and profits!

First off, here is the Note Broker Question…

Hello and thank you two for all your help. My question is why would a note investor pay par for a note?

I’ve been speaking with a person who helps their clients use OWC (Owner Will Carry). I was informed they are working with a note investor that is willing to buy a note for par.

I don’t understand why an investor would do that since they aren’t making any return. Do you have any insight into this?

And Now The Note Buyer Answer:

It is not impossible for a note investor to pay par, just very rare.

First off, there are some costs to close the deal (appraisal, title, recording fees, etc). So at the very least there is a discount to cover those expenses.

Let’s say it cost the note buyer $1,500 in closing costs. They are going to at least discount the note $1,500 to help cover those costs.

That said, the only reason an investor would pay par is that they are happy with the face rate of the promissory note as their return.

If they buy a note that has the face rate of 12%, they will earn 12% on their money (minus the closing costs).

Par Pricing Example When Buying Mortgage Notes

For example, let’s say someone has the following note (with an acceptable LTV and ITV):

• 200 payments remaining
• $525.00 monthly payment
• $40,576.92 – Current Balance
• 14% face rate

If an investor purchased the above note for par (100 cents on the dollar) they would pay $40,576.92.

Now, let’s assume the investor had $1,500 in closing cost (that they did not pass on to the seller of the note). The investor’s “real” return would look like this….

• 200 payments remaining
• $525.00 monthly payment
• $42,076.92 – Amount Invested ($40,576.92 Purchase Price + $1,500 Closing Costs)
• 13.33% Rate of Return

So, if an investor were to pay “par” for the 14% note, after paying closing costs, the investor would still realize a yield of over 13%. Not a bad return.

The reason you don’t see this often is threefold:

1. There are very few notes written at a rate private mortgage investors want to earn;
2. If the note pays off right away a note buyer wants to at least recoup their costs since they won’t be able to earn a return over time; and
3. Most sellers will accept some reasonable level of discount or pay costs.

There are many ways to get closer to par pricing that don’t involve a “full purchase.” Front-end partials, split partials, and even staged payouts are several options, but those are topics for another day (or check out the Mastering Partials Module in the Finding Cash Flow Notes Training)!

Additional Articles on Discounting Mortgage Notes

How Partials Reduce Note Discount When Selling Mortgages

Calculating Cash Flow Notes for LTV and ITV

What is the Face Rate of a Note?

What’s Your Discount?

This is not just theory – it really works.

Need proof? Just last month we were fortunate enough to get one of those surprise payoff checks for $57,569.28!  And that was on a note we sold back in May of 2000.

Now before you start thinking this is some sort of easy overnight riches please understand that this does NOT happen on every deal.  In fact the average note broker fee is about 3-6% of the amount invested by the note buyer. (Check out How Much Money Will I Make in the Note Business for more on this topic.)

But when you combine the power of interest with time and the partial purchase there is an opportunity to earn residual income. How is this possible? Well here are the details from the initial note sale followed by the payoff update.

Excerpt From Article “Real Deal #151 – Residual Income With Notes!“

We were approached with a well-seasoned note secured by five retail strip mall type commercial units. The units had been purchased by a religious organization to use as meeting facilities.  The particulars looked like this:

• Sale Price: $135,000
• Down Payment: $10,000
• Original Balance: $125,000
• Terms: 10% interest payable in 360 payments of $1,096.96 per month
• Remaining Balance: $121,248.52
• Remaining Term: 306 months

We negotiated to pay $92,804 for the full purchase of the remaining 306 monthly payments.  We took a full assignment and purchased the entire note payment stream from the seller.

We then negotiated to sell a partial of 186 monthly payments for a purchase price of $95,046.  We realized an immediate profit of $2,242 on the sale of the note AND retained the right to receive 120 monthly payments of $1,096.96 each commencing in 15 ½ years.

To recap:

• Payments bought: 306
• Payments sold: 186
• Payments retained: 120

Money was made at closing but even better, we retained the rights to a future residual income stream totaling over $130,000 ($1,096 x 120).

If you have heard me speak at conventions this is the “Buy Full Sell Short” or “Tail-End Payments” strategy on the deal affectionately referred to as The Church Note. You also know there are three reasons I prefer to broker rather than hold church notes:

1. They are often single or special use buildings;
2. Income is dependent on donations from the congregation (so if the pastor runs off with the organist it’s quite possible donations would go down); and
3. If they don’t pay who wants to be the one to foreclose on a house of God?

So we were happy to sell this note, make a small fee of $2,242 at closing, and keep a future piece of the cash flow in the form of monthly payments when the investor’s partial paid off in December of 2015. Instead it was,  “Surprise – the buyer paid the note off early!”  So rather than getting $1,096 per month for ten years we received the present value of those future payments in cash today.

Understanding The Partial Note Purchase and Schedule B Amortization

If you are scratching your head wondering, “How is this possible?”, then it’s time to discover the time value of money along with the Schedule B or partial amortization.  It varies by partial agreement, but basically there are three balances or amortization schedules going on at any given time.

• Schedule A -  The full balance amortization owed by the buyer or payer
• Schedule B – The partial balance amortization owned by the investor
• Schedule C – The remainder interest due to the seller and/or note broker (or A minus B equals C).

At the time this deal was sold:

• the full balance (A) was $121,245.48
• the partial balance (B) was $103,515.87
• and the remainder balance (C) was $17,729.61.

Then almost 12 years went by when the buyer paid off in March 2012 so the figures had changed to:

• a full balance payoff (A) of $96,915.46
• a partial balance payoff (B) of $39,346.18
• and the remainder interest (C) had increased to $57,569.28!

(Now if you are following along with your Best Financial Calculator and 7 Tips for Calculating Cash Flow Notes you will notice some slight variations in answers.  These are due to adjustments for extra payments and other servicing items. This is also a good place to mention that we don’t provide legal, financial or tax advice so please seek the counsel of an attorney, financial planner, or accountant if you need this type of assistance.)

So the full balance and the partial balance went down as monthly payments came in but the remainder balance went up!  Why? That is from harnessing the power of interest at the face rate of the note over time!

Want more advanced strategies and calculations for selling and buying mortgage notes?  Be sure to login to the member’s area of Finding Cash Flow Notes.  You can view sample agreements along with a printout of the partial amortization schedule B in Chapter 10 “Mastering Partials for Maximum Profits” on pages 122-140 of the PPS Module.

Whether you are a note broker, a note buyer, or a real estate investor using owner financing, you can put these time value of money strategies to work!

What is the current focus of NoteDocs?

Mike Wood: The current focus of NoteDocs is to offer two services to note brokers in the cash flow notes industry. First we strive to offer noteholder lead data that provides quality leads for those interested in doing direct mail campaigns.

Second, I personally strive to provide quality content to help teach those who are starting a new business.

We seek to provide an improved list over the norm by doing the following:

i. Removing duplicate names and addresses so you only pay once for a name

ii. We clean the list so that you only have leads for first position notes

iii. We only provide residential seller carry back notes

iv. All of our data is specifically “seller” carry and not created by local lenders

How did you get your start in the note business?

I started close to 10 years ago when I met Talmadge Bell. He taught me how to market and the potential of the industry and introduced me to several of the top people in the industry. I continued to grow my business to eventually create my own notes and then saw the need for a better list provider and took on the challenge of being that provider. My focus has slowly changed to mainly manage the list service so I can be sure to keep up a high quality service.

What unique benefits does NoteDocs provide?

In addition to the specialized list that so many need we also offer 2 for 1 lead replacement. We understand that this industry has “stagnant” data since the information comes from public record with no updating so there will be undeliverable returns on mailers. We feel that offering this lead replacement is a good service that can help lessen the pain of marketing and encourage marketers to keep up their efforts and find success.

What type of notes or transactions will your company consider funding? (Location, size, property type, credit, LTV, seasoning, etc.)

We are not a big buyer in the industry right now and I tend to lean to a conservative side on investments. I would only look at small notes under $20,000 face value and would likely only buy after talking to the payors.

What type of note deals would just waste your time?

Delinquent notes.

When I do look at investments I am interested in those that feel very comfortable and that means they must be up to date. You know the kind, the ones nobody wants to sell. Small notes of this type might interest me.

What do you consider the best methods for finding note deals?

I would say the ultimate best strategy for finding notes deals is to work with the seller to create it. Eddie Speed has helped me see the vision of this and the value in such a strategy especially in today’s market.

Aside from being there at the creation I would say the next best method for finding notes is to build a referral pipeline. Getting leads from a referral source with whom you have a good rapport will always be your best bet.

If you are going to do direct mail then you need to understand that it is a numbers game and requires a lot of mailing to many individuals over time. the best strategy there is to build a big list, continue building it and when mailing any item have something that identifies you so they become familiar with your “mark”.

How do you handle commissions to note brokers or consultants?

I have worked different ways with commissions on deals I have done over the years. Since I don’t do a lot of buying right now I would say simply that I would give my offer on any notes presented and let the broker determine their commission before making an offer to the seller. For our lead service I am willing to pay a 20% commission to anybody who sends regular referrals to our company. I just ask that a discussion be made ahead of time and that referred clients make it clear who referred them.

What advice would you give to new professionals just starting out in the industry?

Basic business advice. I currently coach individuals on starting their own business and have done this for many years. I think the advice I would give for this one is similar to any business. Treat it like a business. Know that you will have to work for many weeks or months before seeing a return and commit to it. If you are just “trying it out” you are not in business and you will fail. I don’t see any point in sugar coating it.

What is the most common business mistake you see people make?

Not giving it your all.

I guess it comes down to faith. if you do not truly believe in yourself and what you are doing then you are going to see more struggles and you will see each challenge as a road block. Accept that you are taking a different route than you have before, there are new things to learn. It will NOT be easy but if you are willing to truly give it your all you will be successful. I see too many people who want the different result but are not willing to really DO what is needed to get it.

Given the current economy, have you made any changes in the way you transact business?

Yes I have but perhaps not what you might think. I recognize that he current economy can only strengthen this industry. What I have done different is to get more involved and write more about the benefits and how to truly become successful. I figure if I can get the word out more then more people will listen and recognize the importance of moving on the opportunity now.

Where can someone contact you to obtain more information?

Through my website at www.NoteDocs.com

You can find my phone number and email there. The best option is to contact me through email, mike@notedocs.com since I do a lot of consulting and I spend much of my time on the phone and in meetings but if you leave me a message you will get a return call.

Is there anything else you would like to share with readers at Note Investor?

Simply that there are many opportunities for those who seek them. There is a lot to worry about in today’s world but there is much good as well and I feel very strongly that if you focus your efforts and believe you can make it happen you will see success.

I am personally a very religious person and feel strongly that we all should do what we can to serve others and while you may be looking for solutions for your own situation I would also encourage you to seek the benefits of serving others. Let’s take care of our fellow man as we work to build anything in this life.

If the note buyer wants the seller to pay the closing costs, does the note buyer back the closing costs out and then send me the offer or do I back the closing costs out myself along with my fee and then present the offer to the seller? If I back out the costs, where would I get the cost of the closing to do this?

Great question!

There are generally two types of offers when it comes to buying notes:

1)    Wholesale – a gross offer with the note broker or seller paying costs; or

2)    Retail – a net offer with the note buyer/investor paying costs.

If the note buyer quotes a transaction wholesale and wants you, as the note broker, to pay closing costs then you need to subtract both your fee and the estimated costs from the note buyer’s quote before making your offer to the seller.

You could also just deduct your fee and have the note seller pay the costs. However many sellers are reluctant to pay any costs upfront so it is a selling point if you can eliminate the risk to them.

The amount of closing costs will vary by the state, size of the deal, and type of property. These costs usually include a property valuation, title insurance, recording fees, and the closing fee to an attorney or title company.

Property Valuation

A drive-by appraisal on a residential property averages $250 – $300 but if the investor only wants a BPO or Broker’s Price Opinion the cost will be quite a bit lower (about $75-$100).

Appraisals can be thousands of dollars on a commercial or special use property so be careful on anything that is not a single-family home.

Before you risk your own funds on a property evaluation it makes sense to do some homework by checking values for similar homes that recently sold in the area.  The tax assessor’s office and online evaluation sites like zillow.com can also be good places to research value trends.

Title Insurance

Title insurance is based on the balance of the note but a good average is $400-$600 for deals under $150,000.  Again, this can vary by state and the amount of title insurance.

If an attorney has to issue an opinion of title it can cost over $1,000 even on a smaller deal – especially in states using the old Abstract of Title method.

Some title companies charge a basic search fee to issue a preliminary commitment of title ($75-$100) and then charge the title premium based on the amount of insurance at closing.  To find out what is customary for the area run a quick online search or call a title company located in the same county as the property.

It’s possible to save hundreds of dollars on title fees if there is an existing mortgagee’s title policy insuring the note holder. Many title companies will charge under $100 to do an update to an existing mortgagee’s title policy. The easiest way to check is to get a copy of the HUD-1 settlement statement or closing statement from when the seller sold the property to the buyer.  Then look for the closing costs related to title insurance.

Hopefully you will see a charge for both an owner’s title policy and a lender’s title policy.  The next step is to get a copy of the policy from either the seller or directly from the title company.  If only an owner’s title policy was issued the title company might still be willing to issue the loan policy for a reduced fee, depending on how long it has been since the sale.

Closing Fees

If an outside closing is setup to handle the exchange of transfer documents for proceeds, the closing fee will average $250 – $350 depending on whether an attorney or a title company is used.  If a title company performs the closing they will often reduce their fee if they are also getting the title order.

If a seller ever demands to use an attorney to review their documents or handle the closing – always agree.  Just be sure the seller understands they will pay the costs associated with their own attorney.

Recording fees are paid to the county and are usually under $50 unless it is a real estate contract where deed tax might be involved.  Many counties charge Deed Tax based on a percentage of the consideration when a Warranty Deed is recorded.  This doesn’t apply with the purchase of a Mortgage or Deed of Trust.

However, with a real estate contract the fee simple title stays vested with the seller until the contract is paid in full so the transfer involves an assignment of the contract and a deed to the property.   If the transaction involves a real estate or land contract you’ll want to check with both the note buyer and Title Company for any special requirements for fees.

Retail or Wholesale Note Purchase?

Some investors will pay for the appraisal and pass on just the title and closing costs. This is a little bit retail and wholesale combined into one, but at least the investor covers the primary upfront cost of an appraisal. Usually the title policy premium and closing fees can be deducted from proceeds at the actual closing.

Keep in mind that an offer from a note buyer can be modified or withdrawn for a variety of reasons.  This includes items discovered during due diligence such as poor credit, low property value, delinquent taxes, or improper documentation. You want to do as much research as possible before risking your own funds. In some cases it might be appropriate to have a seller pay or share in the costs to be certain they are serious about moving forward or withholding information.

Until you get a good feel for note buying costs it is better to double-check before quoting whenever you are going to pay the expenses. We encourage note brokers starting out to try going retail instead of wholesale until they get a few deals under their belt.  As your comfort level increases with the note buying process it can make sense to accept wholesale offers – if it also comes with better pricing!

To learn more about brokering or buying notes including sample documentation, we invite you to check out our Finding Cash Flow Notes Training!

What many people don’t ask is, “How can I have a professional note business?”

The reason I think this is important is that one can impact the other. Keep you business professional and, surprisingly enough, some deals will actually find you.

So, how do you make sure you have a “professional” image in the marketplace? Make sure you are following these…

5 Tips for a Professional Note Business

1. Do What You Say

It seems like such a simple thing. If you say you are going to call someone at 3:00pm, you call at 3:00pm. If you can’t make that time, you call them and let them know (in advance). The same goes for meeting someone in person. Not to overstate the obvious, but you will be judged on what you said you would do more than what you didn’t address at all. – Be a person known for keeping their word.

2. Follow-up In Writing

Sure, most note deals will be made on the phone. The initial info gathering all the way to an offer. But…even if the note seller turns you down on the phone, you should ALWAYS follow-up your offer in writing. It makes it real. I have had many sellers say “no” and stuff that written offer in a desk…only to sell to me at a later date.

3. Avoid the “Freebees”

I think it is great you can jump on to VistaPrint.com and print up some business cards. Just pony up the extra couple bucks and lose the “Printed by VistaPrint” on the back of your card. It just looks cheesy. And while I am on the subject, avoid printing your cards on your own printer. That card stock is just too thin to be impressive. The same is true for free websites (if you are looking for great note site ideas, check out NoteBuyerSites.com).

4. Muzzle the Dog*

Too many times I have heard someone on a phone call and heard a dog barking in the background, kids yelling, or the television on. Really? This is how you want to present yourself? Make sure you are in a quiet place when you either accept or return a call.

*When I think about getting rid of all background noise, I call it “Muzzle the Dog.” Saying “Muzzle the Kids” would just get me in trouble with someone I am sure.

5. Dress The Part

Ok, I get that you can do this business in a pair of pajamas in front of your computer. That does not make it the right thing to do. Put on some big boy pants and start dressing the part, even at home. No, you don’t have to put on that three-piece suit, but at least make an effort. I know it sounds stupid, but I swear to this day sellers can “hear” what you are wearing in your voice. Furthermore, if you are meeting someone in person; never be the least dressed – business casual for the minimum is always a good call (especially for your first meeting).

There you have it. Five tips or rules that will elevate you above 80% of all the  so-called “professionals” out there – in any industry.

This breaking news was reported by Scott Arpan of Advanced Seller Data Services (ASDS) based on the analysis of information collected by their company.

They currently compile data from the public recording offices for owner financed real estate notes in over 1600 counties across the United States.

Observations on Owner Financing Market Growth

• The number of seller carry-back loans grew 15% in 2010 and will exceed an additional 25% growth rate in 2011.

• This trend should continue. The first 3 weeks of January 2012 saw a 35% increase in seller loans created over the first 3 weeks of 2011.

• Rehabbers and developers were a major producer of notes through 2007 as indicated by sellers who created more than one note (over 20% of all notes created).

• The current market is dominated by individual sellers who create only one note (over 90% of the market in 2011).

Source: Report released 1/20/12 by Advanced Seller Data Services. See insert for additional details including an owner financing count by state and a graph comparison.

Click to View Full Report and Graph

 

 

Why Seller Financing Is On The Rise

It’s no secret that banks have tightened lending criteria following the subprime meltdown and a record number of defaults. It takes a credit score over 720 and 20% cash down to qualify for the best conventional financing rates.

On top of all that, many buyers have experienced a decline in their credit ratings due to foreclosure or job loss in the wake of a weak economy and declining real estate market. These ingredients combine to make a recipe for alternative creative financing like the seller carry-back.

About Note Seller Lists

A proven method for finding and buying real estate notes is mailing to owner financed note holders. Advanced Seller Data Services makes it easy to obtain this information by compiling the courthouse data and selling in a convenient ready to use format. No more going to the courthouse to find notes.

When we interviewed ASDS President Scott Arpan back in October of 2010, he predicted this increase with the following comment,

“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.”

You can catch that full interview including information on their services by clicking here: Find Cash Flow Notes with Note Seller Lists  or visit them online at NoteSellerList.com.

Learning The Note Business

The note business involves matching sellers with note buyers and earning a fee.  As a note broker learns the business they can consider the transition to purchasing notes for their own portfolio or in tax-free retirement accounts. You may enjoy these articles to learn more about the note business:

Learn the Note Business in 60 Seconds?

5 Myths About the Cash Flow Note Business

Going From Note Broker to Note Buyer

Watch this video walk-through to answer these important questions for finding cash flow notes online:

• Why should I bother with having a website?
• What is the best engine for running a site?
• What should my website say?
• How do I get potential cash flow note sellers to contact me?
• Where can I find an affordable website for my cash flow business?
• How can I keep control and update my site?

If you would like to view the demo web sites shown in the video just click here:

Note Buyer Sites Demo

When the link opens just click on any of the photos or site names to demo each website live.

What is the current focus of Americus Financial Group?

To maintain our reputation as the recognized leader in the purchasing of real estate notes nationwide. In addition, with our knowledge and experience we strive to assure that each transaction is fast, satisfying, and stress-free.

How did you get your start in the note business?

Buying and selling real estate in the mid 80’s. I was introduced to seller-financed real estate early in my real estate career and in 1988 was hired to purchase real estate receivables, structured settlements and lotteries for a multi-billion dollar financial services corporation until my departure in 2003 to start Americus Financial Group.

What unique benefits does your note buying company provide?

We do ALL our own underwriting, pay for ALL appraisals and we are the only investor to my knowledge that does not require the servicing to be released.

What type of notes or transactions will your company consider funding?

Each transaction (as long as it is secured by real estate) is reviewed based on the following criteria in order:

1. Equity
2. Seasoning
3. Collateral Type (SFR, Commercial, Land)
4. Credit

What type of note deals would just waste your time?

Simultaneous closings and “flips”

How do you handle commissions to note brokers or consultants?

They are paid at funding (when we close the transaction). Most fees are wired to our brokers.

What advice would you give to new professionals just starting out in the note industry?

This is a vocation/profession so treat as such – educate yourself and understand that you will ultimately be rewarded with the amount of time and effort you truly put into it.

What is the most common business mistake you see people make?

Requiring and gathering too much information from the note holder before they have the transaction even under contract.

Given the current economy, have you made any changes in the way you buy mortgage notes?

Yes we have –

• As noted above, we no longer purchase simultaneous closings or flips
• We require a minimum of 20% cash equity on most note purchases.

Where can someone contact you to obtain more information?

www.AmericusBuysNotes.com

Editor’s Note:  You can also view the Americus Financial Group listing in the current edition of the Note Buyers Directory for more details!  This updated directory is available for download in the Member’s area of the Finding Cash Flow Notes Training or can be found in the bookstore.

You are not alone. Here are some helpful tips from a recent note broker inquiry.

I previously owned a mortgage broker business and in 2007 did dabble in the note business. I also closed about 4-5 deals as a note broker. I have since closed my mortgage broker business and would like to get into note brokering, but I have a limited budget to start with (about $2000 – $3000). I purchased your program for support and to acquire additional knowledge. How do you suggest I spend my limited funds to get started?

George P. – Virginia Beach VA

Hello George!

You ask a great question and actually have a decent marketing budget to get started. You also have the benefit of being ahead of the learning curve by having already closed several deals.

You will need to set aside enough to cover your basic business setup costs (phone number, business cards, brochures, licenses, and a website).

While there are people in this business buying notes that don’t have a website, I truly believe you need at least a basic 5 to 7 page Note Buyer website to be in business these days. Think of the site as your storefront, providing credibility for your services.

All of these setup items can usually be accomplished with under a $500 budget.

The least expensive way to market is by building a referral base. This can be done through networking with other professionals, offering local trainings, and Reverse Ad Marketing for the note business. Great networking candidates are real estate professionals, agents, CPAs, real estate attorneys, mortgage brokers, and real estate investment clubs. Referral marketing takes your time rather than your dollars and will utilize your business cards, brochures, and website from the setup process.

Run the free ads available online with sites like Craigslist, Ebay classifieds, and other online directories. Avoid buying classified ads or expensive display ads. Print ads rarely payoff unless you use a local want ad type paper (Nickel Nick, Penny Saver, etc) that offers low rates and you live in one of the high volume states for seller financing.

Look at a small but consistent direct mail campaign to note holders in your area. To save funds build the list yourself or purchase from a list provider like Advanced Seller Data Services. In order to maximize efforts, prequalify the notes for basic things like approximate equity (20% or more for best results) and property type (SFR). This will save you from paying postage to mail letters or postcards on deals that are harder to place with a note buyer.

The best way to stretch a small note broker marketing budget is to think local.

Work on branding yourself as the local seller financed note specialist. As funds become available then expand your efforts into other areas. You’ll find the “How To” details including sample scripts, brochures, and marketing pieces for each method in your member’s area of the Finding Cash Flow Notes training.

Hope that helps and feel free to contact me with additional questions.

To Your Success,

Tracy Z. Rewey