Confessions Of a disgruntled Note Broker - Posted by Mark-NC

Posted by Laure on August 25, 2000 at 22:03:14:

I am just doing Lease Options and am coming to the same conclusion. “Once a Loser, always a Loser” History predicts the future. It’s amazing, but those tigers just don’t change their stripes. You’d think that people would learn ! I know that I am done with my lesson. I’ve learned it !

Laure :slight_smile:

Confessions Of a disgruntled Note Broker - Posted by Mark-NC

Posted by Mark-NC on August 24, 2000 at 14:09:14:

Some of you may know me. It has been a while since I have posted on here. The main reason is I have become so involved in my Note Brokering Business that there was no time to even consider comming to this site. This is something I am going to change.

I first started in Real Estate about 4 years ago. I did one flip and I knew this is what I was going to do. I went full time after the first deal. It wasn’t scary to me because I knew that if I had to do it to survive I would. There was no question or doubt.

I gained a wealth of knowledge and contacts from the postings and information from this site and along with using my own creativity and other sources of information I perfected my Flip techniques.

I was very succesfull the first year. I mainly used the Note Business to Flip properties Retail with a simultaneous close on a note. I don’t want to paint a rosy picture, believe me there were some sticky deals and a few fall outs. But thats to be expected in any learning process. The thing was “I just did it”.

Once I Had Become very proficient at flips I decided I wanted to be a Note Broker Myself. So I took off with that. I did some heavy marketing and made things Happen. It was a little slow at first but then it got out of hand. I was working many hours, more than if I was flipping homes. The money was good but the time and effort was not as profitable as flipping.

The other problem I ran into is, I created A job for myself. I couldn’t leave my home office to do any other type of real estate deals. To many this may sound great but my initial reason to get into real estate was to get away from a Job.

One of the reasons I am writing this is to let people know about the Note Business. In my time involved in the business ( Mostly Simultaneous closes ) I have learned a lot. I know who the players are, I know who will let you flip properties and who won’t, who has the best LTV’s and buy rates.

My observation and concern is this, In the short time (3 years) I have been involved as a Broker I have seen many changes. Most of the times the changes are a result of fruad or deals going bad after they have closed. Unfortunatly there has been a lot of fraud and default in this business so now all the Note Buyers are tightening up with their guidelines and scrutinzing the Simulataneous closes much closer. I have even had frudulent deals come across my desk. One in particular, the photo on the appraisal wasn’t even the right house.

I totally understand why the Note buyers are becomming more cautious, they have to. What we could do 6 months ago Is harder to do now and I have a feeling it may get worse before it gets better. This is only my opinion and I wish I could predict what will become of the Simultaneous close Note business. I only base this opinion through experiance and the closing out of 100’s of Notes and seeing a rapid progressive change making it harder to put the deals together. I have a feeling that soon it would be just as easy to get a mortgage on the buyer as appossed to a note purchase.

I am not saying that that The simultaneous close Note business is going away but just as a warning to all that if you haven’t done any deals latley you may want to check with your Note Buyer to be aware of any changes that may affect your deal ( Mostly Non owner Occupied). The reason I say this is there are many Brokers and Note buyers out there and ultimatley most of the Notes sold end up at the same four major institutional buyers through assignment or purchase and they are the ones who set the guidelines that trickle down to the Brokers.

As far As I am concerned I will be backing away from my Broker business and joining the ranks of the rest of you who are doing flips, rehabs, L/O, ect. I will be asking questions again on the board, maybe answering some and learning from all the unselfish people on here that are willing to share their knowledge. That’s how I started out and I am anxious to play the game again. In fact I had to miss last years CRE convention because I had to much going from my broker Business to attend. I will be at next years though. Hope to see you there!


Re: Confessions Of a disgruntled Note Broker - Posted by JPiper

Posted by JPiper on August 25, 2000 at 07:41:29:

Welcome back Mark.

I made the prediction recently that a year from now I doubted that any subprime lenders would be making loans in situations with no owner seasoning. It sounds like the note guys are coming to similar conclusions.

I always find it fascinating though to ponder the reason. The reason given is always “fraud”. I wonder if it ever occurred to anyone that they’re dealing with high risk borrowers? Perhaps their eagerness to loan to people who have been proven to have problems has led to guidelines that don’t make sense. Maybe the problem here has less to do with fraud, and more to do with guidelines that are so relaxed that a 11-12% rate doesn’t compensate the risk involved.

Just an idle musing.

Good to have you back Mark. Look forward to your posts.


Re: Confessions Of a disgruntled Note Broker - Posted by Jonathan Rexford

Posted by Jonathan Rexford on August 24, 2000 at 19:57:49:


Thanks for all the help that you have provided My company over the past year. I have gained a lot knowledge from you just by picking up the phone or you answering email. If you need anything you have my number.

Jonathan Rexford

Re: Confessions Of a disgruntled Note Broker - Posted by dewCO

Posted by dewCO on August 24, 2000 at 16:22:26:

Hello Mark,

When you talk about knowing who the players are andknowing who will let you flip and do simultaeous closes, is that locally in your area or state, or do you know any for outside your state? (Say Colorado.)

Any info. would be appreciated, or if you don’t know any here, how do I go about finding them locally?

thanks so much.

Confessions Of a happy Note Investor - Posted by John Behle

Posted by John Behle on August 24, 2000 at 16:12:22:

The challenges you’ve run into are exactly why I encourage people to invest in notes and shy away from the over-hyped, over-saturated job of being a note “broker”.

The “note business” does not consist of “Simultaneous Closings” and being a bird dog for fickle institutions. That is one small facet of a business that has been around much longer than slick infomercials and their polished salesmen.

There a couple of these infomercial, individuals that you might vote as the most influential in the note industry in the last decade. In fact, they’ve even given themselves awards for their feats. An entire “occupation” has sprung up as a result of the hype. The trouble is - it is an occupation. A job, with the chains attached.

Note Brokering is a very profitable business. Tens of thousands have paid many thousands to learn it. It is profitable for the “hypesters” and a very hard working few that are at the top of the brokering industry. Most invest their time and effort to find an over-hyped, over crowded, under-trained, industry where few make as much profit with the time and effort invested as they might make in a more legitimate form of sales like real estate or insurance.

Some make some good profits “brokering” notes, but the greater profits are as a note “investor”. The difference is similar to real estate sales vs. real estate investing. Some sales agents and brokers make an incredible income (with HARD work), some make a fair living. The majority don’t make it at all.

Yet, a very high percentage of the world’s millionaires and those who are financially independent make their money investing in real estate. The majority are not agents or are not active in brokering.

Sorry to hear that “brokering” notes hasn’t worked well. Wish I could have warned you off a few years ago, but don’t give up the idea of investing in notes and creating cash flows. It is one of the best investments there ever has been and isn’t that hard.

It isn’t a matter of a great deal more money or skill to invest in notes than it is to broker them. It’s a matter of focus, direction and knowledge of what’s possible. Just as real estate can be “nothing down” and actually pay you cash as you invest, notes can be the same way. People just don’t know what’s possible and when they hear about notes - they hear the hype about brokering, not the age old wisdom of buying cash flows.

I’ve seen hundreds of real estate investors come and go in our local area over the last 24 years. Yet, the note “investors” I knew in my area 20 years ago are either still investing or retired. Hundreds have passed through as potential “Note Brokers” because of the traveling circus recruitment that comes through. I can’t think of one that succeeded for long - AS A BROKER.

I love note “investing” and it can be extremely profitable. “Brokering” is generally a short term, low paying job.

I applaud your decision to step back into what works for you. Just keep in mind, that the note business is much more than brokering and note investing can be a great companion to your real estate.

To me, it is like two wheels to a bicycle as compared to the one wheel of a unicycle. I would never want to be without either my real estate or note knowledge and tools - just as I would not want to be without my right or left arm.

Re: Confessions Of a disgruntled Note Broker - Posted by David Alexander

Posted by David Alexander on August 24, 2000 at 16:04:47:

It’s good to have ya back Mark. But let me stop you for a moment. You’ve got your wheels are ready in motion to buy Notes … Why Change stop that buying machine? … Just tweak both the business and the buying machine

What I mean is come join us on the other board (paperboard) and learn to finance your own notes through private sources. You’ll make the same dough as if you brokered but also have the ultimate control over the profit and restructure.

The other thought is that the Institutions only look for the ripe bananas so to speak… tweak your advertising so your radar picks up the less than perfect stuff with the right problems to solve for the big bucks.

Pretty soon, you’ll be out of JOB.

Just an observation.

David Alexander

Welcome Back, Mark! Susan Lyons (Bradenton) FL (nt) - Posted by SusanL.–FL

Posted by SusanL.–FL on August 24, 2000 at 14:41:02:


Re: Confessions Of a disgruntled Note Broker - Posted by k greene

Posted by k greene on August 25, 2000 at 19:40:25:

I have just completed the refinancing of my LAST hard money deal. As I always say once a deadbeat always a deadbeat. When they have your money you are at their mercy or the mercy of the court system. I do not know which is worse!

Here, Here!!! That and making sure they have a good - Posted by dewCO

Posted by dewCO on August 25, 2000 at 09:42:43:

appraisal. Or even getting a second “backup” from their own appraiser would seem to eliminate or at lest control the problem. Go figure, as usual!

Re: Confessions Of a disgruntled Note Broker - Posted by john in tex

Posted by john in tex on August 24, 2000 at 18:07:46:

Same for the Ft Worth area of Texas

Thank you


Re: Welcome Back, Mark! Susan Lyons (Bradenton) FL (nt) - Posted by John

Posted by John on August 27, 2000 at 06:44:12:

HI Susan. Bradenton here too.