is anyone making any $$$$ in the note business - Posted by Reg


#1

Posted by John Behle on December 15, 1998 at 22:32:26:

Finding is abolutely essential to success. I spend a whole day on how to find notes. We talk extensively about working with Realtors and what to present at meetings, etc.

Funding is almost a whole day. I teach about short and long term financing through both institutional and private investors with an emphasis on how to cultivate private investors. Very little emphasis or discussion is on brokering notes. The emphasis is how to create your own portfolio.

We talk about improving notes and creative techniques to make profits with notes, including trading for real estate, restructuring the terms, triggering early payoffs and fixing up bad notes.

I discuss collections with an emphasis on avoiding problems and avoiding foreclosure if their are problems. If a note goes into default, you will profit, not lose. I always profit when I restructure a note. I pay myself well for being creative and win/win in fixing people’s problems.

We discuss the “due-diligence” of how to quickly with little cost tell good notes from bad ones. There is a large emphasis on safety and avoiding scams. My approach avoids almost any kind of scam a person could dream up.

We discuss goal setting - the proper way - intention, elements of success, getting started, building a team and overcoming obstacles. At the end, on the last day, we look at all possible obstacles and how to overcome them. In the live seminar, every student leaves with the knowledge that they know what they need to to succeed, including sources to supplement their education.

We look at deals and case studies and follow some all the way through. In some seminars we have actually loaded up into a mobile home and gone to qualify, negotiate and buy notes.


#2

is anyone making any $$$$ in the note business - Posted by Reg

Posted by Reg on December 11, 1998 at 11:15:07:

I have been lurking on this site for a few days and reading everything I can. This and a few other sites is sort of my due diligence on REI. I am new to REI and will admit ignorance on many of the subjects. I am very intrigued about the note business after attending A global resource network seminar. No, I did not pay anything for that over priced seminar, I intuitively new something was not right. If GRN was going to make so much money by doing business with me then they would make money on the back end and not charge $7995 for thier “education”. However the concept really got my wheels turning and I have been researching every since. this site has been a great source for information.

Now for my question. Is there anyone outside of John making any real profit from the note business?

Please do not take the question as sarcasim or anything negative. I read the success stories and see people in many of the other parts of REI making money. But I can’t recall one success story from anyone doing the note business outside of mobile homes (not a slight because money is green no matter how you make it, legally that is).
I am not asking how much because I know this depends on the person. I jsut want to here about some successes within the last six months. I guess my real question is it possible for me? But if the majority is not doing then I have to wonder is it hype?


#3

Re: is anyone making any $$$$ in the note business - Posted by Max W.

Posted by Max W. on December 13, 1998 at 06:59:36:

The note business is not nearly as easy as the infomercial gurus make it sound. Newsweek ran an article about Larry Pino (Diversified Cash Flow Institute) in their June 8, 1998 issue that illustrates my point. Out of 18 people that took his paper course and responded to their follow up survey: Only one person had done any deals. He made a total of $300.00 on one and $750 on the other.

The biggest problem most new brokers face is finding quality notes held by people that want to sell. It is much more difficult than they make it sound.

A major survey by a funding company found there are relatively few brokers that are successful in the paper business (exclusively) on a full time basis. Many others, (myself included) use knowledge of paper to make creative real estate deals work. It took me a year to broker my first deal, now I create paper and hold / sell it to make creative real estate deals work. This has worked for me ever since I went full time 3 years ago. I believe this combination is where the real opportunity is. Brokering is fine to put money on the table NOW, but the real wealth is in owning paper / real estate for cashflow and / or deferred payment.

If you learn / utilize paper AND the real estate side of the business, you will be able to do deals most investors would walk away from. This is very apparent with Lonnie Deals but also applies to “stick built” real estate deals as well.


#4

Re: is anyone making any $$$$ in the note business - Posted by J.P. Vaughan

Posted by J.P. Vaughan on December 11, 1998 at 14:29:15:

As John correctly states, “Lonnie Deals” are NOTE deals.
Off the top of my head I can think of 2 Success Stories
specifically dealing with paper. One is called something
like “How I Bought a House for $1.00” and the other is
on a mobile home note portfolio.

There are also quite a few Stories where success on the
buy or sell side involved creating paper.

A thorough understanding of Paper is essential, whether
you chose to make money strictly through real estate,
or strictly through paper, or from a combination of both.
In fact, one of the reasons we launched this “Cash Flow
Forum” was to stress how very important it is to understand
Paper.

JPV


#5

Most of it is “NOTE” business - Posted by John Behle

Posted by John Behle on December 11, 1998 at 12:28:36:

Actually much of what is discussed and the success stories are the NOTE or PAPER business. Buying and selling a Mobile Home to create a note is an aspect of the paper business. Many of my examples you’ll see in the materials are just the same principles as applied to real estate.

Paper is far broader than just “Flipping” notes as you will see in reading this newsgroup. Unfortunately in people’s minds the informercials and road shows have narrowed it to that one somewhat flawed approach.

I come from the old school of paper where you bought for your own portolio and profited long term. Investors learned to make money up front by brokering the notes to their Corp. or Limited Partnership. They then took a management fee and collected the notes long term and dealt with any potential problems - and profits.

My approach is unique in that way. I didn’t come from the breeding grounds of the “Flipper” seminars. I brokered notes for only a short while in the beginning until I saw a better way.

I added to that massive training in real estate, creative finance, mortgage banking and in particular the field of exchanging. What’s interesting to me is that that is where everything done and discussed in real estate and paper has it’s roots (Exchanging) and the offspring don’t even know or remember where they came from.

The creativity of real estate applied to paper leads me to a very unique and profitable approach. It may not sound as simple in “sound bites” and “pay me and you’ll profit performances”, but it works. At any time, in any market.


#6

Re: is anyone making any $$$$ in the note business - Posted by Rer

Posted by Rer on December 13, 1998 at 22:29:00:

Hey Max,
Thank you for your post. My take the paper game is that the real security is owning the paper and not brokering it. and to own it you need to have your own cash to buy it. just from a numbers stand point it would seem that there are a great number of people full and part time chasing the same paper. the ones that are able to buy the paper will prosper. That is not a knock on the business. the problem I see is trying to make enough to get to the point that I can buy paper and hold it. of course that is no secret from reading articles on this site. But it seems to me that I would have to spend great deal of money marketing my business to be successful at it. so this would not be a low cost business to do as I have seen it advertised.


#7

Re: is anyone making any $$$$ in the note business - Posted by Reg

Posted by Reg on December 15, 1998 at 22:42:23:

J.P.,
today I understand what you and John mean that it is all the note business. With out “Paper” Making money in real estate would be very dificult.:slight_smile:
Reg


#8

Costs of marketing - Posted by John Behle

Posted by John Behle on December 14, 1998 at 17:37:29:

It costs me exactly $0 to send a fax to all the brokers in our area each month. It costs just a few bucks in long distance if I hit the whole state.

I make money every time I teach a continuing education seminar. At $25-30 a head, it isn’t much (about $300 per hour), but they are paying me for the opportunity to let them know about my services and establish in their minds that they would be totally foolish to go to someone else.

I do spend about $100 per month for newspaper advertising, but it more than pays for itself. You can always do the business without it.

Email costs nothing - unless you factor in the $15 per month, but I would have it anyway. Phone calls to attornies, real estate agents, title companies, mortgage brokers and paper seminar graduates cost nothing.

Referrals - the heart of the business - cost nothing.


#9

Re: is anyone making any $$$$ in the note business - Posted by Max W.

Posted by Max W. on December 14, 1998 at 11:17:14:

There is no need to put up any of your own money in order to own notes. I regularly buy distressed property and resell utilizing simultaneous closings. Generally, these transactions will require me to hold a second note. Since I make a profit from the sale of the first note (AND recoup all $$ invested), everything I receive on the second I consider gravy. This allows me to sell quickly, generally at full market value, make money at closing and create a future cashflow. The second is not generally saleable and is not a very secue note BUT, if I never receive the first payment, I still made money on the deal.

Also, another possibility is to offer the property / note seller of a simultaneous deal a Dollar amount for the whole note and then sell a partial to a funding source. This will not result in monthly cashflow, but you will get paid when the note is paid off (6-7 years is the avg.) , your portion of the note is paid or the balloon arrives. This is a powerful technique that does not make a big difference in the quote to the note / property seller. The amount you will receive in the future increases with each payment made.

There are many ways to make money with paper but even more ways when you control the real estate AND the paper.


#10

I Disagree, In Theory - Posted by MN~Chicago

Posted by MN~Chicago on December 13, 1998 at 23:20:50:

Rer:

I cannot disagree from experience. However, from
my read on John’s articles, there are ways of
conducting the note business without using any of
your own money.

Additionally, were you to work with real estate
brokers, whom he considers one of the best sources
for notes, your overhead is the education you
acquire to present your self as an expert to them.

I view it more as a mater of perspective. You see
the glass as half empty; I see it as half full.
The reality is the same, but our approach will be
dramatically different to that reality.

Just a thought.


#11

Re: Costs of marketing - Posted by Reg

Posted by Reg on December 14, 1998 at 20:28:43:

Thanks John,
That helps me get a handle on the cost associated with what I would have to do.
Reg


#12

Re: is anyone making any $$$$ in the note business - Posted by Reg

Posted by Reg on December 14, 1998 at 16:04:02:

Max,
I appreciate your post. As I stated before I very new to this form of investing and therefore not Kowlegeable about it. your post really helps me in my due diligence. I am currently reading everything that I can get my hands on to get up to speed. Real estate is very interesting with so much creativity envoled. The only reason that I was not involved in it earlier is because of mis education. This site has been so informative and the people on it. So please be patient with me if and when I make a dumb statement or 2. This forum is the only sounding board I have and I honestly want to learn more. I will keep asking questions but understand it is from the point of view of a curious child rather than a condeming parent.:slight_smile:


#13

Re: I Disagree, In Theory - Posted by Reg

Posted by Reg on December 14, 1998 at 16:35:03:

MN,
Thanks for your reply. However, experience is worth a lot more than theory. We as business people have to consider the market that we embark on. From my experience it seems that people who start homebased businesses, most of the time, don’t analyze the market that they are about to go into. A homebased business ussually has low entry cost and there many people will toss their hat into the ring. This business would be no different in that it is a reletively low entry cost. No Large corporation will jump into an already established market without analyzing how much market share than can hope to gain. They would also have to determine if they got into the market reletively late how they can seperate themselvs from the pack of other businesses. I look at me and my business the same. In other words when I contact a perspective seller in order to get his/her business I will have to either be the exclusive contact or be able to offer something no one else can. With real estate agents you have to build a raporte which takes time.What do you do in the mean time while building up that network? I am not looking at the glass half empty or half full. I am simply analyzing the situation to determine my next step. I can agree with you in thoery but I think experience is the best teacher and getting information from someone elses experience is that fastest way to learn. That is why I posed the question Is anyone making any money? I wanted to hear some experieces be they good or bad. I will then weigh the information from the “rose colored glasses” crowed and the “sour disposition” group and then make a decision.

Reg


#14

Re: is anyone making any $$$$ in the note business - Posted by Max W.

Posted by Max W. on December 14, 1998 at 16:54:34:

Reg,

One of the few books (available through mainstream bookstores) that I seen that actually goes into the powerful relationship between creative real estate and paper is “The Stefanchik Method” by John Stefanchik ISBN #0-688-12741-X, $20.00. He gives case studies of deals that he has done and goes into the discussion of brokering vs. investing. Borders bookstore has it on the shelf in my area. Also, Lonnies materials are “must read” even if you don’t want to do mobile homes. The paper concepts and creative thinking process is the same for all types of collateral. " Paper to Gold" (available on this site also) is also a good resource once you understand the basic concepts of paper. I hope this helps.


#15

Both Long Term and Short Term - Posted by John Behle

Posted by John Behle on December 14, 1998 at 17:28:45:

Agents are a long term resource of great value. Once you make contact and a good impression - they can be yours forever. Some agents bring me deals 15-20 years after I first met them.

Yet, it is also one of the very best short term resources also. An office presentation, flyer, fax, ad in the hot sheet or continuing education class causes immediate results as well as long term.

Network with the agents and you have little if any competition ever. They only want to know one person and will respond to education and creativity. Agents know about notes that can or will be sold usually before anyone else. You can buy the note before the Lemmings ever even hear about it.

Agents can also be very loyal. I have agents that wouldn’t even consider going to someone else. They want action not promises. They can read through the in-experience and lack of education of others that contact them. Yet, most don’t. They either aren’t taught to work with agents or are intimidated.

Their heads are filled with nonsense about the county recorder’s office or mailing lists.

MOST PEOPLE THAT HAVE A NOTE DO NOT WANT TO SELL (at a discount). Most new note finders waste their time with the un-interested instead of finding and filling a need.

It is the same as walking out your front door and knocking on other people’s doors to try to find real estate. If you want to buy real estate - and make a profit, you will look for the person that both wants to sell and has a definite urgency and flexibility.

Do the same with notes. Zero in on the people that either need to sell or want to. Have others out there looking for you.

Granted, one on one networking or speaking to Realtors in groups is more socially threatening, but that’s where the rewards are. People tend to try only the un-productive “non-personal” approach because it is less threatening.

Agents are an incredible resource. Advertising - if done effectively - can also work well. It’s a matter of knowing what you are doing and learning more than the drivel that is passed on from one infomercial guru to the next.

A successful approach is to find the ones who do want to sell or would if they knew they could.


#16

Re: is anyone making any $$$$ in the note business - Posted by Reg

Posted by Reg on December 15, 1998 at 17:48:18:

Max,
Thanks so much for that tip on the book. I bought it today and it really filled in some holes for me. I am only half way through it but it has been a fantasic help for me.
Reg


#17

Re: Both Long Term and Short Term - Posted by Reg

Posted by Reg on December 14, 1998 at 20:38:28:

John,
Do you go into this type of information on your video series. What are some of the topics in your 5 day video series that would be most benifical for the beginner?
Reg