Setting Up the “Luck of the Irish” in Note Investing

When I suggested that someone write a funny article that tied St. Patrick’s Day to note investing…well…I didn’t think it would have to be me.

While a solid investing strategy is built on research, due diligence, and experience, sometimes it feels like a stroke of good fortune when you find that perfect deal.

So, in the spirit of St. Paddy’s Day, here are five attempts this St. Patrick’s Day week to give your note investing a little bit of the luck of the Irish.

Setting Yourself Up for “Luck” in Note Investing

Four-Leaf Clover – Finding the Perfect Note

First off, there is no PERFECT note. Notes are created for a reason. Poor credit, hard-to-move properties, long marketing time due to sellers wanting top dollar – you name it. It is the heart of what is great about the note industry; you can pick and choose your hot buttons. For me, it is about minimizing risk. I like seasoning on a note…or more equity.

Horseshoe – Strong Collateral Protection

A horseshoe is said to bring protection and good fortune. If one area brings protection (hint, there are actually two), a strong LTV (loan-to-value) ratio is your lucky charm. LTV is the key to payments continuing. If someone has equity in the property, they are likely to continue making payments. If they have trouble making payments, they will likely sell the property and pay you off.

Lucky Penny – Buying at a Discount

You know that saying, “Find a penny, pick it up?”  The note industry is like that…only you lock in those pennies UP FRONT in that YOU decide how much you want to pay for a note. There is no ‘set price’ when it comes to notes. Sure, some note sellers are trying to get 100 cents on the dollars, but I have not found that you don’t need to put quite that many pennies on the table.

Leprechaun’s Tricks – Due Diligence Saves You

Let’s be honest; we all know Leprechauns don’t exist…but if they did…true to their nature, they are known for their tricks. There are not necessarily ‘tricks’ in the note business, but pitfalls can be avoided with some upfront work. As a matter of fact, we did an entire two-day masterclass on just due diligence. We even included a checklist. File this under “an ounce of prevention…”

The Blarney Stone – The Gift of Communication

Kissing the Blarney Stone is said to give you the gift of gab, and in note investing, strong communication skills can be your real-life version of this magic. Whether negotiating a discount on a note or working out terms with a borrower, the ability to talk your way into a better deal is pure gold. [Pro Tip? Find a win-win scenario, and the rest will care for itself.]

So…

While St. Patrick’s Day is about luck, mortgage note investing is about smart decisions. But hey, if a lucky penny or four-leaf clover helps you land a great deal, who’s complaining?

Final thought: I will never suggest we come up with a ‘theme’ article again.