New seller carryback note creation may now be as high as 1 in 16 home sales! My advice is: do not squander this opportunity

Given that Scott Arpan of Advanced Seller Data Services cited in our teleconference last Thursday that NEW note creation (and this is just what actually shows in HIS data compilation) could top 110,000 this year (and he covers 1/2 of U.S. counties so he’s not seeing all of the new notes out there) AND given the fact that the National Association of Realtors cites a seasonally-adjusted annual rate of 4.48 million homes that will be sold this year (but, taking into account at least 30% of those NAR figures reflect distressed properties that don’t figure into new note creation, we’ll adjust that downward to about 3.13 million homes will be sold this year for our purposes)– meaning that 110,000 out of 3,000,000 would be 3.6% and that is a CONSERVATIVE figure because Scott is including only 1st position notes over $30,000 and he’s only seeing somewhere over half of all new notes.. so we can say with a large degree of confidence that AT LEAST 1 in 25 new home sales involve seller financing based on those numbers. That is phenomenal, but HOLD ON… the actual situation is better than that…

To explore this further, Scott’s data is solid and he taps records from 1600 counties, of which there are 3009 in the U.S. So, his proprietary data compilation methods show a definite pace of 110,000 NEW seller-financed notes this year but we can interpolate that to be a little over 1/2 of the actual amount, so let’s call that, conservatively, 180,000 new notes all told this year. So we take 180,000 out of 3,000,000 and that gives us 6% which is 1 in 16!

(There are probably well over 1 million 1st position notes that have been put into circulation since 2008 but let’s not forget all of the 2nd positions out there in addition to those.)

Given that industry expert Eddie Speed already had the numbers up to 1 in 50 seller-financed transactions to home sales as recently as 2009 (and that number was only 1 in 400 back in the 1990s), that would mean we’re climbing rapidly. Make that EXPONENTIALLY.

(And these are just real estate notes we’re talking about. Business notes and other cash flows aren’t even considered here and those are vast markets in and of themselves.. matter of fact, those markets are much LARGER)

So, whether you’re marketing directly to note holders (using a list) or marketing to referral sources or a combination of both, you can be confident that the business is there and will not run out anytime in the foreseeable future.

Read ALL of the Tips

KEY EVIDENCE OF THE GATHERING STRENGTH OF THE CASH FLOW INDUSTRY: With bank lending down and seller financing up by a rather astounding 40% over last year (wow) according to industry monitoring firm ASDS, home prices rose in March for the first time since last July (is loosening the market up), helped by tighter housing inventory. This as reported by data analysis firm CoreLogic today– and it’s especially important to note that, EXCLUDING the sale of distressed properties, prices climbed 0.9 percent on a yearly basis (more movement = more demand = more money to be made). Mark Fleming, chief economist at CoreLogic, said in a statement, “This spring, the housing market is responding to an improving balance between real estate supply and demand, which is causing stabilization in house prices”. Additionally, the major benchmark S&P/Case Shiller index released in late April showed a rise in U.S. single-family home prices in February for the first time in 10 months, with a gain of 0.2 percent on a seasonally adjusted basis.

WHAT THIS MEANS– AND IT’S ALL GOOD…

The greatest BUYER’S MARKET in our lifetime is officially “on” and in full force. Here is the big picture: Banks still aren’t lending. Seller financing is up and filling that void (with a vengeance). As home prices stabilize and tick upwards,  more buyers who want to avoid missing out on the lowest possible deal will be drawn in, and sellers who must sell but have been stuck in place for four + years will continue to take back more financing than ever before in order to move their properties. Resourceful cash flow practitioners are positioning themselves at the epicenter of this movement by helping home sellers liquidate the seller take-back notes they’ve created into lump sums of cash.

KEY POINT: To capitalize on this situation, you must EDUCATE the noteholder. Educated noteholders are the only ones who sell. A simple “I buy notes” message is NOT enough. You have to position yourself as the “go to” expert here. Breaking down the barrier is NOT that hard. It just takes some know-how and the right approach. Our Elite Cash Flow Network members, to name one group, are extremely well-trained for blasting right through these barriers. And I field quite a few excited phone calls from members who, after having broken through on their first deal, then do another, and then another and another. It’s the CONFIDENCE generated by the first one that invariably propels our members on to breakthrough success. You need to work the program! Don’t let it sit on the shelf! Use the incredible resources and mentoring you have right at your fingertips.

The consensus that I’ve been hearing from many of you is that ATTORNEYS as note referral sources are quite straightforward and are rather easy to work with. As a matter of course, they deal with clients’ “issues” all of the time (heck, that’s what they do for a living).

POINT OF FACT: Just about EVERY cash flow that someone has taken back or is about to take back has gone or is going through the hands of an attorney.

So, going straight to ATTORNEYS with your marketing is like tapping into a superconductor for notes. (That should excite you if you are in this business for keeps).

Here’s another pretty wonderful observation that I’ve made: The attorneys that end up being REGULAR note referral sources generally DO NOT ASK for anything in return (like a fee or anything). They’re being paid by their client (on retainer) anyway to handle these affairs, and they are just busy people who, as a matter of course, will call you and say something like “I saw your ad, letter, flyer, etc and I have a client that is collecting payments on [such and such], but he needs to cash out and is interested in selling the rest of the payments. Can you help or would you be interested?..”  AND THEN all you do is ask the right questions that your funder has told you to ask, AND THERE YOU GO! Generally speaking, it’s pretty easy. REALLY.

And if you handle yourself in a professional manner, you will get MORE referrals from the same attorney. Do this with SEVERAL attorneys, and THEN you can see how efficiently your business will MULTIPLY. (for illustrative purposes let’s figure 1 transaction per month x $5,000 assuming an average referral fee of between $2-$10,000)= give or take some $60,000 per year. 2 transactions per month = $120,000 per year, etc, etc) YOUR GOAL is to do SEVERAL per month but I’m just trying to spell it out for you.

If you want to be trained right in marketing to ATTORNEYS, the ONE

program I implore EVERYONE to get ahold of is “How To Turn 90% Of The People Who Won’t Sell Their Notes Into  Big Time Cash Profits”. IF YOU already have the program, go through it again and then utilize your Elite member CONSULTING privileges if you need further help on how to implement the strategies.

You’ll be EXTREMELY glad you did.

Here is a link to the program:
http://noteinvestors.com/store/90.htm

There’s no doubt this is the best time ever to be in the Cash Flow Business, but I think we can all agree that FINDING notes is the key to success. In other words, it’s all about how well you develop leads!

Finding the money to fund a note deal is not a problem- as our Elite members know, they have ready access to a whole network of funders and also steady, helpful guidance and consultation that beat the learning curve and help them get transactions done professionally and expeditiously, usually without any problems unless there are “surprises” (which happens sometimes but even when it does, it’s the corporate funder who takes all of the risk so the Elite member can concentrate on generating leads and collecting referral checks.

So all of the the help is right here; there is no travel necessary in this business; no real time commitment necessary (you can go places on just 5 hours a week or so); there’s no advanced class needed .

“Learning and earning” is best– just start and enlist the help of experts which is why our Elite program is so popular.

What you do absolutely have to do, however is reach noteholders and get them to call you. And we find the best way to reach them on a grand scale is through attorneys. You can build your own contact list- they’re easy to find. And what you need to do is not only establish credibility when you contact them; you also need to distribute solid educational bible-type marketing materials that will thoroughly educate the noteholder, and that attorneys and their clients will refer to again and again.

Your educational marketing piece should cover all aspects of how to manage their note– and also what all of their options are.

People only do business through people they trust. That’s why simple letters are not enough. Sure, a letter, ad or post might net you a deal now and then, but most noteholders don’t sell after the first letter. They sell sometime after they’ve initially taken back the note– just not right away. The key is to position yourself as the “go to” professional.

And if you give them credible, educational reference material that positions you as the authority, and distribute these through attorneys who have already built up a level of trust with their client, then you’re the one who’s going to get the business.

Here’s an example of what you might do:

You might start out with a ready reference piece– “10 Things Every Note Owner Must Know”. Make it solid, make it credible. Record an information line that noteholders can call in for a non-obtrusive, low-key way to get thoroughly educated on all of their options, including selling the note for cash or requesting an appraisal. This is a highly effective way to do business because a hotline is nonthreatening and many people initially do not want to talk to a “live” person but they are interested. After they call the hotline, then when they call you later our experience has been they are ready at that time to do business–with you– because they are thoroughly “warmed up” at that point.

Distribute your reference material through attorneys touting the information line. If you want to do several deals a month, this is the path.

There are many ways to approach this. Believe me, it’ll make a major difference in your bottom line. I’ve given you just one idea. There are ready made solutions as well.
Here’s one.

QUESTION: “Are appraisals done on any type of note OTHER than a real estate note?”

ANSWER FROM THE NOTE INVESTORS GROUP EXPERTS:

No. Only real estate notes.  A real estate NOTE appraisal is documented in much the same way as a real estate PROPERTY appraisal; the value of real property can be estimated with a pretty fair degree of accuracy from lender to lender, appraiser to appraiser, etc., give or take other valuation adjustments due to improvements in the property, etc. While there are many other types of NON-real estate cash flows that are bought and sold, the underlying securities carry considerably more variability and flavor and thusly you’re going to get much wider pricing fluctuations depending on who’s quoting or bidding so formal appraisals generally aren’t done on those. The other major variability you run into when appraising a real estate note is the payor’s credit score, but those variables can easily be factored into the buyer’s valuation formula so the quotes we get back from multiple institutional buyers for a given note tend to be fairly consistent when comparing one against the other.
So, to sum up, all the demand for appraisals are in real estate notes. Non-real estate notes, generally speaking, involve more of a “bidding” process when bought and sold.

Tim

P.S. We’ve had a sizeable influx of people coming in at the last minute to sign up for the note appraisal program. The response has been very strong and many smart cash flow practitioners who took advantage are being scheduled for orientations this week and will be receiving their materials. If you want in at this late hour, please heed this gentle reminder that this offer extension ends for good at midnight tonight Tuesday March 27 so forewarned is forearmed.
Here is a link to the offer:
http://noteinvestors.com/store/appraisal.html

Push your marketing hard (but not expensively) to the financial planners, accountants and attorneys over the next 4 weeks. With tax time approaching, many people unload assets (such as notes) at the same general time they file last year’s returns. Many brokers make serious hay in March and April.

Direct mail marketing vs email marketing

There is a tendency by some today to think of direct mail as the ‘ugly child of marketing’, but you’d be wrong if you buy into that. Large scale marketers are still mailing hundreds of billions of marketing pieces through the mails because it yields a high return on investment, despite its lack of “glimmer”. Direct mail is targetable, you can tell a lot, sell a lot, control cost and scale it.

Mail is a powerful workhorse that needs to be part of any marketer’s quiver.

CFOs of small and medium sized firms (the exact type of law and accounting firms we’re after) are still opening and reading mail.

Direct mail with the url of your business website can make your campaign as a whole work harder and stronger. Mail still resonates in the human psyche as an important sales tool. Still today, anything sent in an envelope is perceived as important; you have the bills and then the promotional and personal mail.

Email needs to be deployed, but it has to compete with lots of spam and clutter. Direct mail is not going away. The large scale marketers (credit card, wireless and satellite companies) know the place of mail and aggressively market through that channel.

On the other hand, smart cash flow practitioners operate on a much smaller scale, targeting well and controlling costs by distributing marketing pieces that repeat referral sources like attorneys, accountants and financial planners tend to keep. And right around tax time, that’s especially invaluable in our business because that drives our business. Hint: Think professional note appraiser brochures.