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 effectively reach every single note holder that exists this way (and you can direct them to your website for more information and/or to request a quote). The reason you can reach every note holder is that mortgage note transactions are a matter of public record and so you can research and compile extensive lists of them yourself through the county recorder’s offices (if you have the time and patience) or, alternatively, you can buy lists from vendors who mine this type of data for a living.
Personally, I think it’s infinitely more efficient to purchase a quality list that’s already been screened for out-of-date addresses, high LTVs that are not investment-grade (if you get a call from someone with a low-quality note you’ll never get it sold so it ends up being a time-waster), notes that are not in first position, underlying properties that are not owner occupied, etc. When you’re looking at a small upfront investment as low or lower than 20 cents a lead as compared with spending hours researching and screening on your own, purchasing a list (to me) is a no-brainer.
Once you have the list itself (and I would start with at least 1,000 names to increase your chances of generating responses early and often), you need to craft the right marketing message… it has to say the right thing and it has to look good. You should start with an attention-grabbing headline and include a good “call-to-action”. Then you send it out and wait for the responses. That’s it. The interested parties will call you. You want to measure your results over time and tweak your message and mailing frequency accordingly so as to maximize your response rate, but also, by and large, keep this in mind:
Direct mail marketing is very SCIENTIFIC and relatively predictable when it comes to response rates. That’s why it’s important to treat this as the “numbers game” that it is. Experienced note brokers know that for every 1,000 note holders contacted, 8 to 25 will respond with a request for quote. Your response rate typically goes up for every month you’ve been marketing. By and large, that’s because note holders become motivated to sell at different points along the continuum. Prospect “A” may discard your first message but then keep and/or respond to your subsequent messages. That’s why follow-up is vital. Follow-up is where you’ll get most of your conversions. In fact, most note holders don’t sell in the first month or two after they take back the note; they sell a bit later down the line when they become disillusioned with the record-keeping and management tasks and/or they shift gears and now need cash and therefore develop a strong desire to sell, etc.
So, look at it this way. Direct mailing is an investment with a relatively predictable return. If you’re brand new and starting from scratch with your first mailing, without the benefit of having done any follow-ups yet so everybody is seeing your message for the very first time only (meaning many on your list are not yet motivated but will become motivated a bit down the line with your subsequent messages), we can conservatively guesstimate that you should close an average of at least one note per 1,000 names contacted so a $500 investment (figuring postage into the equation) can easily turn into somewhere between $2,000- $10,000 in your pocket.