What's easier, paper or reals estate? - Posted by The Baze

Posted by John Behle on April 26, 2000 at 19:40:32:

We’ve talked a lot about financing notes over on the cash flow forum so instead of typing a 50 page response, let me reference you there. I have gathered and archived the articles and posts related to funding notes over on my site. www.papergame.com - check under “Paper Posts”. You can find the same info here in the archives, but I saved everyone the trouble and did the search myself.

Yes, you can finance paper easily. I primarily use private investors but you can use institutions too (not the same ones that are buyers). You can do things through corporations or other entities to avoid the personal liability.

With notes as opposed to real estate they are going to look far more to the note as collateral and the credit of the payor. Private investors aren’t necessarily concerned about my or a company’s credit, but if you use an institution many will look to you for repayment - though I have had insitutions make non-recourse loans.

One nice thing is when you buy and finance notes you are usually picking up equity and cash flow that shows on your balance sheet. So, if I borrow 15k to buy a 20k note, my net worth increases as well as my monthly cash flow. Financing a lot of real estate lessons your ability to finance more. Paper has a different effect though it varies as to who is doing the financing. Then as you acrue a portfolio, you can go out for even cheaper financing.

Or… you use the notes to buy properties at a discount of 30-40% discount.

What’s easier, paper or reals estate? - Posted by The Baze

Posted by The Baze on April 26, 2000 at 12:58:24:

This is for those who’ve got some experience w/ both. I’m just sorta curious. I’ve never done anything with notes except I created a purchase money mortgage once & sold it to buy a house, ala JP Vaughan. I’m thinking about maybe purchasing a paper course, & I wanted some insight as to how difficult the paper business is. Also, is it easier to broker notes or buy them for your own portfolio? Thanks.

Tom Bazley

Which is more valuable? My right leg or left leg? - Posted by John Behle

Posted by John Behle on April 26, 2000 at 15:05:13:

They go together.


First, I don?t do just one and would not want to be without one form of investment or the other. As far as the knowledge and training go, I would not want to do real estate without my paper knowledge or paper without my real estate knowledge. It?s like having one hand tied behind your back.

They are the perfect companions and complimentary investment tools. The due diligence in either buying real estate or paper is very much the same. One isn?t necessarily easier in this area. Real estate may seem easier to finance than paper, but that is because most just don?t know how and where to finance paper.

When it comes to ?flipping? the process again is very much the same. The difference might be that it may be a little harder to find notes to flip than properties. Yet, when it comes to buyers it is much easier to find buyers for notes. The challenge in finding notes is not one of limited quantity - just limited knowledge and creativity. There are more than enough notes in every market.

Successful paper investment might be more of a people business than real estate. Networking is crucial. Not that it isn?t valuable in real estate, maybe just not as important to success. It?s a bit of an ?over populated? market in some areas of paper right now. BUT - it?s over populated with under-trained people.

Flipping is a good way to start in notes, but investing and building your own portfolio is the ultimate goal - within a few months - not years. Flipping notes just tends to be a sales job and generally not as profitable as flipping properties. There is heavy competition in flipping notes and even most of the top brokers don?t make that astounding an income - despite the informercial promises.

Flipping real estate tends to have higher profit margins than flipping notes, but I believe note investment (building your own portfolio) is both safer and more profitable than real estate investment.

I started in properties 24 years ago and have purchased millions and used most techniques. I gravitated both toward the profit potential and lower risk of notes. There can also be higher leverage on notes too and it is easier to buy a deal finance 100% and walk away with cash than it is in real estate. Management of course is simple compared to real estate. I do find notes simpler and easier in the long run, but as I said, I would not ever want to be without one or the other.

You might also want to read the article here titled ?Loanlording vs. Landlording? in the CASH FLOW FORUM articles section at: http

OK, my curiosity is piqued more. - Posted by The Baze

Posted by The Baze on April 26, 2000 at 19:25:21:


Just how easy is it to finance paper? And, do your courses teach those techniques? Can paper be financed w/out having to be personally liable on a note(something I’m not real fond of) the way real estate can, ala a hard money loan? Can someone whose resources are allocated elsewhere and who doesn’t want to use conventional bank financing to buy notes make any money in the note buying business? Tell me how. I’m intrigued. You may have a sale. Thanks.

Tom Bazley