Posted by David P. Butler America’s Note Network on March 11, 2000 at 13:03:22:
That’s a pretty tall order you have there! First, I think it should be pointed out that several of your questions would require someone having to at least give you a “mini-course” in order to provide you with more than the most cursory of answers.
And it appears that you are going this thing a little bit backwards - i.e. once you get out and do some deals, then you’ll be able to buy somebody’s course. But your questions indicate that you need a course of at least some kind before you even begin trying to do some deals!
The second problem is that the note industry itself is guilty of using a fallacious marketing technique, encouraging people to spend large sums on their various courses, with the unrealistic promise that you need no money to get started.
It is true that a guy can adopt what I call “guerilla” marketing techniques, and exchange shoe leather for cash dollars in an attempt to get started on a minimum budget. But in doing so, you are giving up hours, and incidental costs of some sort, and you need to have some source of steady income to survive while you are trying to launch this second business.
The reality is that trying to do business without marketing is like winking in the dark. You know what you are doing, but nobody else does! Ergo - how will you get the deals? And marketing costs money!
The second part of the equation then follows. How will you persuade people to do business with you, if you don’t know the business very well. You will need to have at least some knowledge to make it work for you even as a birddog (finder), who begins by bringing notes to an experienced broker, and earns referral fees until he is able to get up and running on his own.
Without some knowledge, you will have a hard time getting the note sellers to deal with you - moreover, you run the risk of wasting a lot of time on bad notes, because you don’t know enough to tell the difference.
Believe it or not, our industry is full of greenhorns who mistakenly believe that a note is a good note, simply because the seller is willing to sell it, and the seller is willing to let them work on it!!!
Fortunately, you have several low cost ways to get the knowledge you need to even get started. My favorite recommendation to beginners has always been Jimmy Napier’s “Invest In Debt”. It is an easy read, and it covers just about every basic a fellow needs to know before even considering jumping in the note business. For $17, it won’t break anybody.
Bill Broadbent’s “Owner Will Carry” is another excellent read that will give you some good insight into the more common economic and legal issues that are frequented in note dealing, and gives you with a little taste of the various forms that are often found in the business. Again, a low price to begin with at about $29 or so.
Another excellent primer for any note broker is George Coates “Smart Trust Investment In California”. Don’t let the title fool you… the material applies everywhere to a large degree. This book really covers a lot of practical and legal ground in depth, yet it
too is a fairly easy read, excellent material, and generally available for approx. $29.
He also has an excellent forms book with explanations and instructions that give terrific insight in to the paper shuffle involved in completing note transactions safely, and managing them after you have them. It goes for about $70 or so.
Also, Jon Richards has two nice little start up courses. The first is his “How To Start A Profitable Discounted Note Business” and it provides an excellent broad overview of the basics of note brokering. Again, an easy read, offering many valuable bits of information that, for only $65, can give you a real good idea as to whether this business is for you, before you spend an arm and a leg moving up to the next level.
Jon also has another course, “Calculator Power”, which I believe is a must read for anyone entertaining the note business as an occupation or investment vehicle. This business is numbers driven, and Jon’s easy to follow CP course provides an excellent grounding in the material you need to know. Only $49.
There are several others as well, but as you can see, purchasing any or all of these materials can get you out of the gate on firm footing without spending even $275. If you purchase one or two a month over the next few months, you will have given yourself an excellent “in home” seminar at a very low cost, and you’ll definitely feel a whole lot more confident in your abilities and direction.
I don’t remember how many of these titles are available right here on this site, but I am sure you can pick up at least one or two of them through CREO.
And if you haven’t done so, go through the many free “How To Articles” and “Money Ideas” information listed here on CREO. We also have a similar free library at America’s Note Network, which you can easily access through out banner above.
Once you get well grounded, you might consider going into John Behle’s “Paper Game”, or Jon Richard’s “Advanced Paper Course”. Both offer a lot of more advanced broker/investor techniques, marketing tips, and deal making skills, with Behle’s offering perhaps a broader scope of creative ideas for turning pig’s ears into silk purses.
Not too many folks successfully make the jump from kindergarten to their Bachelor degrees without taking a few steps in between. And given the costs involved, I have seen too many people jump into deep water before they really have learned how to swim.
This expense and lack of knowledge usually gets them in way over their heads, and they wind up drowning before they ever gave themselves a chance to get across the sea. The note business is a professional financing business, influenced by money markets, economics, and a wide variety of state and to some degree, federal laws.
To be successful at it requires various degrees of skills in dealing with people, negotiations, financial calculations, due diligence investigation, risk assessment, contract law, deal structuring, escrow functions, and marketing techniques. Not near as overwhelming as it sounds, but like any other profession, you need to have at least grasp of the basic mechanics before hanging out your shingle.
Go ahead and get your “dog-paddle” down first, and find out if you even like swimming before you go full bore into enlisting for the Navy Seals. I take
that back - maybe shooting for lifeguard duty on “Baywatch” would be a better goal to aim for ;-).
Hope this helps, and best of luck in your pursuit of the note business… it truly is one of the best little business opportunities in the world.
David P. Butler Vice President, Broker Relations