I am in contact with most of the successful note brokers in the country and it is clear that you, our readers, have a knowledge of financing, cash flows and the time value of money that is just too valuable not to use in real estate investing as well as notes.
Consider how you, as a reader and cash flow expert, can find and fund real estate bargains that students of the infomercial gurus don’t even understand:
1. Marketing: As a note expert, you know that if you are not spending 90% of your time finding notes, you won’t be successful. You know that well-written brochures/websites and a powerful marketing campaign are what make a successful broker. As a real estate investor, you can use these same tools to find real estate bargains. For example, few real estate investors have brochures, business cards or resumes on their skills to give to a property seller. Your credibility is an important part of buying notes and real estate. If the seller knows you can be trusted, and you can buy their asset, you have truly distinguished yourself from the average investor.
2. Negotiation: Successful note brokers know that people skills are far more important than calculator skills. We know how to talk to a note seller, assess their note, their motivation, and how much money they need. Few real estate investors take the time to do these things with a property seller. If you can listen to the seller, and have the skill to construct a purchase offer that meets the seller’s needs, you will truly distinguish yourself from the hordes of get rich quick, infomercial dreamers.
3. Financing: Few real estate investors have even a rudimentary knowledge of the time value of money, even fewer understand financing, and not one in a hundred can help a seller create a note at the point of purchase and then sell that note to an institutional note buyer. But, we, as note brokers, understand financing strategies that will create transactions where the average real estate buyer sees only an impossible deal. Skills with a financial calculator enable you to help sellers sell difficult-to-finance properties with ease. You distinguish yourself because you understand the “time value of money.”
4. Selling: Unlike the average real estate investor, you have many outlets to sell notes you create.
You know that you can become involved in transactions that banks won’t look at. Consider investing in mobile homes, non-conforming properties, defaulted mortgages, business notes, industrial and commercial properties, distressed real estate…the list is limited only by your imagination. Separate yourself from the average investor by helping to find hard-to-finance deals and participating in the upside profits.
The reason you can use your skills in both real estate and notes is that you can bring together troubled buyers and sellers to create a deal. No one else can do that without the expertise of a well-trained note broker.
5. Resources: As a note broker, you have resources not available to the average investor. You know about credit reports, title reports, packaging loans, getting appraisals, and using research skills to find properties that interest you. The average real estate investor knows very little about the “nuts and bolts” of financing. We, as note brokers, know a lot if only because we can call any of our institutional note buyers for help in structuring a transaction.
We are all truly distinguished and far more skilled than the average real estate investor. We just need to learn to use these skills in real estate as well as notes. Robert Allen, who a wrote an influential, if flawed book in the 1980s, called “Nothing Down”, popularized the phrase “Your Price, My Terms…My Price, Your Terms.” However, most real estate investors don’t appreciate the power of that phrase. Can you think of a way to pay an inflated price for a property and still make a profit? Sure…Pay a dollar down and a dollar a week! Can you think of a way to buy a property for all cash and still make a profit? Sure…buy it 20% below fair market value.
How, you ask, can any reasonable person do these things? Glad you asked. It takes work! It takes knowledge! It takes skill! It takes time! You may have to look at a hundred properties and make fifty offers…I’ve done it. It’s a lot of work, but I made more on that one transaction than I made in whole year working at my regular job in industrial sales.
You can buy property 20% below market, and get great terms on financing. It just takes work, knowledge, skill and time. As a note broker, you have all these tools. Your task is to think beyond notes as I and other successful note brokers do.
We’ll try to help you expand your horizons in the coming months.