Posted by David Butler ANN on November 08, 2000 at 23:46:19:
Yep… water, water, everywhere… but not a drop to drink!!! That is definitely the note business!!!
And it has always been that way. But extensive research clearly indicates that the problem lies squarely on the shoulders of the private cash flow industry, rather than on the marketplace itself. Most note players have never really learned how to effectively market themselves and the private note business. Here’s a quick thought to consider - several years ago, the private paper asset base in real estate was estimated by HUD and several industry studies, to be almost $350 BILLION strong, including $100 billion in residential first mortgages (the rest was 2nds, commerical, land notes, etc).
At that time, it was estimated that during the year measured (1994 I believe), 153,000 private real estate notes could have been sold… but only 34,000 were sold. Of the remaining 119,000, it was determined that 18,000 fell through because the buyer and seller could not get together on price.
Incredibly, the other 101,000 fell through the cracks, because the buyer and seller had ever been brought together! Obviously, you have to get that first kiss before you are going to put the deal to bed, right?!
Admittedly, the subprime lending markets really put a dent in the private marketplace these past few years… and it is estimated that private real estate paper assets dropped to about $318 billion by the end of 1999. But with the beating those fellows have taken over the last 18 months, it looks like the markets will be cycling back toward the private sector again over the next 36 months.
But… it was worth knowing that during the past year, America’s Note Network had Its biggest year, including $15 million in note transactions in September 1999! And during the past year, we have seen almost $200 million in note transactions (and another $70 million in loan originations?).
There is a lot more to the story, but to save space and time, it might be best to refer you to an article I wrote last June, CASH FLOW 2000 - Merging Markets, at:
By the way… Terry’s “Cashing In” opening statement was more to the point that working mobilehome paper is a whole lot easier, AND there is a lot less competition than there is for real estate notes… from brokers and investors. He is right (and thank goodness he became my friend five years ago and persuaded to go after that niche). The trick there is to know the business, and finding the notes will fall into place for you.
We have some extensive information related to that in our FREE report, TIN CAN ALLEY - Stairway To Heaven? at: http://notenetwork.com/at.cgi?a=118510&e=report-tincan.html
Hope this helps, and see you in note heaven
David P. Butler VP Broker Relations
America’s Note Network