The act of buying privately held mortgage notes is a lot of things to a lot of different people.
For some, it is a means of investing money and getting a good return on that investment.
These ‘Investors’ prefer a predetermined return on investment, backed by real estate, without the hassles of owning real estate.
Owning real estate, particularly rental properties, comes with tenants – which, even under the best of circumstances can become strained as the property needs upkeep.
Nope, Investors prefer to own the debt – the note – without the hassles of being a landlord.
Other people in the industry are ‘Consultants’ or ‘Brokers’ if you will.
Many investors were once brokers and there are two very good reasons for that.
- They get to find notes for sale and learn on someone else’s dime – using “Funder” money and collecting a referral fee.
- They just don’t have the funds to invest in a note…yet.
So, if some people invest in notes and some people broker notes, what makes anyone in the wrong business?
Well, it is a matter of where you are focused.
Some people are mistakenly focused on the money that can be earned or even think it’s a way to get rich quick.
I am not suggesting you can’t make money – you can – but that is not your “business.”
Ask any investor or broker that has been in the business for some time and they will tell you they are in the business to solve problems.
They do so by helping the note seller liquidate their note.
That is the business.
Why is this important?
Because a potential note seller has a problem.
The problem may seem to be that they need money (and indeed they do). But the real problem is the underlying reason for needing the money.
They need money to solve something.
It could be anything – good or bad.
They may owe taxes, have medical bills to pay, or need to send a child to college. They might want to take a vacation, buy a boat, start a business, or make a different investment.
That is the problem you are trying to solve and you are going to solve that problem by helping them liquidate, all or part of, their real estate note.
That is the note business. Helping people solve a problem.
Over the years I have seen many deals blown because the Investor or Broker did not keep that simple fact in mind.
We are here to help people.
Our job is to get them the most amount of money possible for their note (while still making sure the investor has the requested return on investment at an acceptable ITV).
In the end, everyone wins...
The seller gets to receive a lump sum amount of money (instead of waiting years or decades for their money).
The investor gets a good return on their money (far more than “parking” the money in the bank) and…
The broker (or consultant) receives a referral fee for putting the two parties in touch.
Check out this video on ‘Presenting Offers’ for a better understanding of how people make money while helping people sell notes.
Always remember that the note business is centered on helping people – providing a service.
Keep that in mind and you may find yourself closing more deals and finding better ways to market yourself and your business.
Your recent post is right on target.
Keep up the good work.
R