As a note broker or investor, your success depends upon finding notes with the exact parameters your investors (or you) are looking for. Working off of a direct mail list that has been culled from the public records and screened as closely as possible to reflect the LTV, property type, loan origination dates, loan amount, any balloon information and even the state where the property is located in can save you a ton of time as compared with other methods of marketing for notes because you can zero in on the investment-grade notes with the highest ROIs at the lowest possible risk.
Additional notes regarding direct mailing note holders:
Certainly, there are other note marketing methods besides direct mail, such as networking, that are also important over the longer term. But, for fast results, nothing beats direct mail because you are going right to the source; right to the “high-grade ore”. The key is working off of a good quality list that gives you the note holder’s name and current mailing address in addition to the above key parameters so that you can easily blast your marketing message out en masse, and only to people who are likely to be holding notes that you are interested in.
Direct marketers employ this approach quite scientifically; that is, they can reasonably assume (based on past results and trends that tend to remain fairly consistent over time) that for every 1,000 note holders they directly market to per mailing, anywhere from 8 to 25 will request a quote because they are either interested in selling or motivated to sell at that particular point in time. So, remember the importance of repeat mailings. Many sellers who aren’t motivated today oftentimes become motivated later on.
You want to repeat your marketing month after month, and you’ll close more and more note transactions as you gain more experience and hone your marketing message.
You can reach almost every private note holder that exists through use of a direct mailing list, since every one of these transactions are a matter of public record. You could, in fact, reach 500,000 note holders in one fell swoop if you had the budget, although most beginning brokers start out with a more modest list of, say, 1,000-3,000 names and build from there.
A really serious direct marketer mailing to 3,000 names each month, depending on skill level and experience, can end up closing anywhere from 2 to 15 note transactions, thereby yielding a net profit (after mailing and material costs) of anywhere between $3,450 and $72,450 or more per mailing, based on current investor payout figures (a return on investment of anywhere between 35 and 2,741 percent)! I’ll expound on this in future posts.
One more point for today. While you can certainly research the public records yourself for private note holders, it’s generally a very time-consuming process, and you are also limited to one county within one state at a time as you go through the records. Additionally, you will still need to separate the privately-held notes from the conventional (bank) loans which make up the vast majority. My advice is that you are much better off in going with a list like this one which has been culled by professionals and can be had for somewhere around 20 cents (or even less) per record. What’s more, there’s no guesswork involved; you know most every record is a good one and you’re not wasting time on duds.
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