Plenty of people take a course on notes and expect the business to follow. In my experience, the note buyers who make it share five things: money to invest, a strong marketing plan, credibility, technical knowledge and, sooner than they expect, some staff.
Money to invest in your business
First, you must invest money in your business. The good thing about our industry is that you can truly start without laying out huge sums, unlike, say, a franchise. But unless you devote a substantial amount of money to marketing, you simply will not break into the ranks of the high-income note buyers. We get too many calls from people who cannot even afford a basic book on trust deed investing. These people will never make it.
My observation is that you need somewhere between $5,000 and $10,000 to invest in your business. That lets you develop professional marketing materials and buy basic office equipment. In my case, we spent $5,000 developing a brochure to give to Realtors. It has returned many times that amount, but I had to make the initial investment. I’m afraid too many novices think that once they pay for the training, they are ready to begin.
It is not unreasonable to expect new buyers to make this kind of investment. Above all, you must commit thousands of dollars to a marketing program. You also need to spend money on an office, a separate business phone line, a computer and basic software. Note buying can be a rewarding business, and it deserves to be funded like one.
A marketing plan that finds notes
You need a powerful, even incredible, marketing plan to find notes. The good news is that there are more notes in the world than any of us could ever hope to buy. The bad news is that they are very hard to find in large enough numbers to make you wealthy.
You need a well-thought-out marketing plan to which you commit money, time and most of your effort. Hank Harenberg says that if you are not spending at least 80% of your time finding notes, you have your priorities wrong.
I have found that no one way of finding notes works for everyone. You need a plan that fits your skills, your budget and your abilities. There is no magic or hidden secret to success in the note business. In short, build on your marketing strengths and spend most of your time finding notes.
Credibility with sellers and referral sources
Whether you are dealing with note sellers or professional referral sources, you must appear credible. I think we are seen somewhat like bankers. That means dressing the part, acting like you can perform and doing what you say you will do.
You need to know the vocabulary of the industry and be comfortable talking to a note seller. Metropolitan Mortgage, the investor I worked with, had exceptional material that walked you through the technical side of packaging and closing a deal.
You will need some computer skills. At a minimum, you must be able to produce good-looking letters. Sloppy letters on poor paper mark you as a rookie. Credibility also means not being too cute with your business name, logo or stationery. Remember, we are seen as bankers, and it is to our advantage to keep that look. Some of the best logos use marble or steel-like motifs in small amounts. They imply strength and integrity, your most important assets. Flaunt them.
I tell people I work with Metropolitan Mortgage, a billion-dollar company that does not advertise locally. I tell people I have access to an unlimited amount of cash with which to buy their notes. This is true; I don’t think I’ll spend all of Metropolitan’s money. Flaunt your associations. It enhances your credibility.
Technical knowledge and the math
You must take classes to stay current, and I don’t think you are really in the business unless you attend conventions. You need the contacts, the new ideas and the chance to meet like-minded colleagues. This simply cannot be overstated.
Second, to be credible you must understand at least some of the math in this business. If you don’t know what a “reverse partial” is, or if you have to leave the financial calculations to the people you sell notes to, you will find it hard to look credible. Get comfortable with the financial calculator and you will close more deals.
Buy a few books on note buying. The more you know, the more deals you can close, the more respect you will get from sellers and the more money you will make. Knowledge equals income.
Staff, sooner than you think
The fifth thing you need may surprise you, and you will probably resist it: think seriously about hiring some minimal staff. Once you have done one or two deals and feel this business is for you, the paperwork becomes a major burden.
Software has eased some of this, and more keeps arriving to make it easier. But it is too easy to get bogged down in the details of this business and lose sight of the fact that marketing is everything.
A part-time helper is not that expensive, and I have found that helpers repay much more than their wages. I know it’s a big step for many of you, but hire a neighbor by the hour and I’ll bet you quickly find that person is more than worth what you pay. This business can easily bury you in details so you can’t keep your eye on the 20% of your work that earns 80% of your income.
