Using passive direct mail to unearth huge, overlooked opportunities

Passive direct mail to a purchased leads list is the most cost effective, time-efficient way to find and nail down seller-financed note deals…. and notes secured by lower-tier properties, i.e. manufactured homes, represent huge, often overlooked opportunities.

There is actually a ton of opportunity today in purchasing (or Continue reading

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Mailbag: Would you recommend I get started in notes by doing JVs?

QUESTION: Would you recommend I get started in notes by doing JVs?

ANSWER: I am of the opinion that putting up ANY of YOUR OWN money to fund a JV as a means of “learning and earning” is a mistake if you don’t know what you’re doing yet.

That said, “learning and earning” is great. Just not that way. Continue reading

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Happy New Year from Note Investors- Let’s get off to a fast start

Hi all- Hope you had a great Holiday season. I know I did. And, now it’s time to get back to work in earnest. Interested in making money and padding your bank account?? Then read on—-

I fully believe that, far and away, learning how to find and then refer note transactions to institutional investors is an excellent, risk-free way to learn note investing from ground zero (for someone with little or no experience). If you find the RIGHT Continue reading

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FAQ: What every note investor needs to know

Q – Hi Tim,

Can you tell me what successful investors are looking for when they evaluate a privately-held note for purchase? In other words, what are the criteria that make up a good note in today’s market?
Ken

A – Hi Ken-  I like to see AT LEAST a 10% CASH down payment and a 15 to 30-year amortization with at least three months payment history (the longer the better).

Now, while the above example constitutes what I would ideally LIKE to see, in practice, we don’t always see notes that have these terms. However, don’t be afraid to submit a note of lesser quality to an institutional buyer.

Thanks for a great question — hope this helps!

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Skin in the game?

QUESTION: I’m selling off some investment property, and I’m considering taking back a 1st position note from a potential buyer who also wants me to take back a second position note for the down payment at a higher interest rate. It’s tempting because of the potentially higher net return, if I did so, would this diminish the value of my note if I want to sell it down the line, and, if so, how badly?
 
ANSWER: This would absolutely diminish the cash value because an investor wants to see ‘skin in the game”. No cash down raises a red flag. The buyer has essentially nothing at stake except for his potentially having to give the property back through foreclosure if he defaults. There may be a buyer who  would go for that, but the discount you’d have to take would be considerably higher than it otherwise would if cash was put down at closing. Anything less than, say, 10% cash down (at a bare minimum) is just plain undoable for just about any investor you present this to. My general advice in cases like these would be to run the potential “deal” by some volume note investors and see what they say and/or if they quote and at what terms. Defer to their experience. If it isn’t good enough for them, it almost certainly shouldn’t be good enough for you unless you are a very seasoned note investor and are buying for your own account to keep for monthly income and have performed your own thorough due diligence. Move on to the next deal. The climate’s too fertile right now to be wasting your time on these.

We’ll show you how to get started brokering notes— and you’ll get paid for your qualified referrals!

It’s that simple. We’ll show you how to find notes and qualify them— then we take over from there, negotiate and fund them.
Then we pay you.
There is absolutely zero risk on your part– we put up all of the money!
If you want to get started today, click here to learn more.

 

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Selling notes to investors: potential pitfalls

I always recommend people start out brokering notes before even thinking about buying notes for themselves. However, you want to be careful about who you broker that note to. Institutional investors are best- they know how to mitigate potential losses, as they assume all of the risk themselves– they have strong knowledgeable management and hedge on their own against losses.

Private investors, on the other hand, Continue reading

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Buying notes for your own account- best practices

Profits from brokering notes can be substantial, but investing in notes for your own account should be the ultimate goal of any note broker. That’s where the big money is.

Far and away, the best way to learn about the process of investing in notes is by brokering notes to institutional investors and watch what they do. These are professional buyers who Continue reading

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Marketing is a Numbers Game– and the note business is no different

Finding note sellers is a numbers game— the more you reach, the more quote requests and closed transactions you’ll get. Therefore, the key is reaching as many bona fide note holders as possible with the right message.

Some combination of direct mail and internet (website, social media, email, etc) should be used to maximize your reach. Speaking of direct mail, it’s a highly targeted approach– you can Continue reading

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PUT THE OFFER IN WRITING AND SPELL OUT WHAT THEY CAN EXPECT TO HAPPEN

Far too many brokers are weak in presenting a purchase offer to a note holder. You want to make sure that you send a WRITTEN offer before you initiate conversation. It’s kind of amazing to me as far as the actual # of brokers who just call and give an offer verbally. This is incredibly minor league. The initial answer to a verbal offer is ALWAYS going to be “no”. Ever hear of the saying “The first one to mention a figure loses”? It’s true. Call it human nature or the way things are or whatever you want to, that’s just the way it is.

So, to paraphrase one of my old high school teachers, Jessie May, “Let’s not be stupid”. BE PROFESSIONAL. First of all, you need to be confident that you have a good, competitive quote in hand from a bona fide, reputable funder. The next thing you want to do is write the offer up, and give them at least a couple of options, i.e. full vs. partial purchase (the latter is a lot easier to make if the seller has given you an amount of cash he specifically needs to come away with).

Finally, you need to make the offer in a manner something like this:

– quote them the figure that you ‘will pay them for the entire note’, and add some more language such as ‘when you add up the $___ that you have already received plus the amount we will be paying you, I am sure you will find this to be a very generous offer’. (This is a pretty powerful little approach, as it prompts them to mentally tally up the figures for themselves rather than just reading a number off a piece of paper.)

– quote them the partial offer and tell them ‘I will pay you ____ for the first ___ # of payments, after which you will resume collection of payments after payment # X. Then say, ” when you add up [this and this plus the total amount you stand to collect], I am sure you will find this to be [a very generous offer as well].

And then, at the end, tell them what will happen next if they accept: “If you decide to go with this, I will need copies of [documents] and your OK on [the initial purchase agreement which gives them an opt out if you fail to perform, and most importantly gives you the option to purchase but also the option to opt out if there are surprises or something doesn’t check out].

THEN and only then, AFTER you’ve sent them the written offer, it’s time to call them to talk and review the offer as well as answer any questions they may have.

You’ll find that you’ll get a lot more offers accepted this way. Be precise, be specific, be professional. And always remember: Even if the offer is not accepted this time, it may well be another month from now. BE SURE TO FOLLOW UP methodically because that’s where most of the acceptances come in (that is, “down the line” a little bit). When they accept a couple of months later, all things being equal, you simply reduce the original offer by the # of principal payments that have been received since then.

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Note holders are not directly marketed to by nearly as many brokers as you might imagine.

note-holder-direct-marketingAfter the initial rush of mail they typically receive when their newly-recorded note first appears in the public records, we’ve found (through years of interactions with note holders and also by virtue of our extensive experience in holding notes ourselves) that after the initial 1-2 months, broker mailings then drop off drastically– to an average of less than one postcard a month!

So, that’s good news for you if you know how to take advantage of this situation, with the level of competition out there being as lousy as it is (most brokers have unbelievably bad marketing plans).

Recognize that a big, big opportunity exists for you to swoop in and market to these note holders after the initial 1-2 months pass and the competition drops off. Just pick any list that doesn’t consist of brand new notes.

Furthermore, follow-up marketing to the same note holders again and again is especially important for cultivating new business because people become motivated at different times. They’re only going to respond to you when they become motivated, so one single mailing is too “hit or miss”… you may or may not be hitting them at the point in time when they’re ready to sell.

So, to increase your chances of doing so, repeat your marketing message to the same people 2-7 times.

(This is also important for building credibility and trust as well as a strong recognition factor. People will only do business with people whom they recognize and trust, so you want to establish yourself as their “go to” source for help in cashing out of their notes.)

That’s all part of the science of direct marketing. Drill your message into the prospect’s brain by following up, following up, following up to cultivate all of that business that’s literally right there for the taking at any given time!

Side note: Also keep in mind that marketing can be automated. There are mail fulfillment houses that can do mass mailings for you on the cheap.

Also, don’t forget–you need to say the right thing(s) in your message. It always pays (if you’re new and unsure of what works and what does not work) to use proven marketing material that’s properly worded so that you can be sure that your campaign is truly on track to yield maximum response.

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