A newcomer once asked a question many beginners have: can you start as a note broker part-time, in your first year, and bring in meaningful extra money each month? He was a single father. Richard Chang, a broker and funder based in the Boston area with five years in the business at the time, gave an answer thoughtful enough to stand on its own.
“Could anyone let me know if on a part-time basis it is possible to generate $800 to $1,600 a month starting out the first year as a note broker? I’m a single father.”
Here is Richard’s reply.
Your background matters more than you think
The answer to your question depends on your prior business background and your geographic area. In my observation, the successful long-term note businesses tend to have principals with prior related business experience: real estate sales or development, mortgage origination, commercial lending, legal practice, accounting and so on.
If you can leverage your past business experience and contacts, your chances are better.
Where you live shapes what you can find
The origination and availability of receivable assets vary widely by region. Seller-financed mortgages tend to be more common in certain states in the South, Southwest and West. An experienced representative of any reputable mortgage note buyer can tell you how viable your own state is for seller-financed notes.
Structured settlements, on the other hand, tend to be more common in urban and metropolitan areas, particularly in the Northeast. Again, check with a reputable buyer of structured settlements. The same idea applies to other classes of receivables, such as lotteries and commercial or consumer accounts receivable.
Keep your day job and learn through a master broker
You’re in a difficult situation. Some experienced brokers would say, “Don’t quit your day job!” Others would say, “You won’t make it unless you devote a substantial amount of energy to growing the business.” Sounds like a Catch-22.
One alternative is to use a master broker to handle the concrete details of negotiating and closing a lead. You keep your day job and have the chance to earn referral fees by passing deals to the master broker.
If you go this way, try to understand every detail of the process, and ask plenty of questions when you don’t understand something. You are effectively paying tuition. When you feel reasonably comfortable and secure, you can consider leaving your day job and going solo.
Be honest about time and support
I spend a lot of time with my two young children. But I had time to build my business before they came along, and I have my wife’s income, my son’s preschool and my daughter’s live-in nanny.
In other words, I believe a single father would need a lot of social and financial support to start a note business from scratch. It may be something of an illusion that entrepreneurs get more free time. John Kenneth Galbraith once described American small business owners as the “self-exploiting class.”
I pray that you make a wise decision as you go ahead.
