Startup cost can be minimal, with overhead greatly reduced or diminished for note brokers who work out of their homes. Marketing to find note holders is going to be the #1 expense which will require some time or money.
So, a note broker must be good at finding the notes, and then connecting with the investor. The opportunities are in specialized note holder lists mined from the public records as well as networking with other investors who buy, sell, and hold notes. You might also look at note exchanges (although those types of sites are not usually where you’ll find the best deals). It can also be extremely useful to market to financial professionals such as attorneys, accountants and financial planners and let them know you can assist in generating lump sums of cash for their note holding clients.
It only takes, say, 12 or so referral sources each referring just one note a year to you (conservatively) to close one note per month and them you are into a full-time income working part time.
But, back to direct mail which is the fastest way to reach known note holders. It will require some initial upfront expense in order to produce a profit. Of course, if done correctly with the right message sent to the right targets, direct mail can be highly profitable even with a response rate of, say only 2% which is generally considered average in direct mail. The right targets are note holders who are motivated to sell now (at the same time they receive your mailed marketing message).
It is important to remember that direct mail is not a one-time shot.
Follow-ups to the same note holders who did not initially respond need to be sent out regularly (i.e., monthly or bi-monthly) so that note holders get used to seeing your marketing message which builds your credibility. When the time comes for them to sell, you will be the one they are most likely to contact. Not only that, but they will have your contact info readily at hand (most important).
Your response rate should well increase the longer you’ve been marketing. Note brokers have been known to get their response rates as high as 5% per mailing which is fantastic given the thousands of dollars in referral fees per transaction– i.e., at 2-5% every 1,000 mailings can mean 20-50 note closings per monthly mailing and when a note broker is doing this kind of business, it may become especially important to further automate the direct mailing process.
While it is possible to close your first note transaction on your first mailing or marketing effort in your first month, keep in mind that you are starting out from ground zero and your marketing message is only being heard for the first time by everybody. Like in any business, the bulk of your revenue (in this case note closings) are going to come from the follow-ups. The more offers you make, the more will be accepted and declined—but also there will be many note holders who will eventually become note sellers after initially declining your first offer.
Note holders become motivated to sell at different times– some are ready now, some will be ready later. You simply need to stay in touch with (keep in front of) note holders and you will almost certainly close transactions on a regular basis.
Think about the marketing messages or direct mailings you see or receive over and over again from various companies. When it comes time (when you are
ready) to make a purchase, you’re certainly at least well aware of company X because of their repeated exposure or contact with you and they will at least be on your “short list”– if not your #1 go-to choice. True?
In the next video, I’ll tell you more about the closing process and how/when all parties get paid.
IN THE “HOW TO TURN 90%..” PROGRAM, YOU WILL LEARN:
