Posted by John Behle on November 02, 1998 at 17:43:28:
Perfect timing. J.P. just posted an article on increasing your yield in this “Cash Flow” forum. It gives some of the basics and examples. There are over a hundred different techniques for improving notes. These are covered in The Paper Game Trilogy - especially in the five day video course.
questions - Posted by David Parker
Posted by David Parker on October 30, 1998 at 11:42:54:
Hello,
I am new to the note business. I read lots of the questions that are written by other people, and it seems to me that all the answers they get are general. No specifics,i.e. names of funding companies, addresses of such places. No lists of potential or where to find such a list of investors that buy notes? Is it me or am I missing something. Thank you for your time.
Best Regards,
David Parker
Re: questions - Posted by Ken
Posted by Ken on October 31, 1998 at 12:15:22:
I agree with John, in that owning the notes should be every ones goal. I brokered in the beginning but now am buying for my own portfolio and the returns are going to be several times greater than making a thousand here and there by brokering. One difference since I started buying for my self is the time it takes to close a note. Most institutional investors I brokered to took up to 45 days to close, I lost several in that time frame. I can now close much faster and that is what most sellers are after. (In my part of the country anyway) Strive to build a portfolio of your own.
Details - Posted by John Behle
Posted by John Behle on October 31, 1998 at 11:17:52:
There are very detailed answers in this forum! There hasn’t been a question on funding sources until yours.
In addition to the Noteworthy site Bud shared, there are listings of investors Nationwide and State by State in the directory at www.notenetwork.com .
Most questions regarding financing notes have had to do with working with private investors, which is an alternative to working with institutions. My focus in investing has always been to work with private investors. When I started, there were no Institutions buying notes nationally and only a couple buying locally in my state. The two local institutions were thrift and loans and were the only thrifts to survive our thrift and loan crash - because of their paper portfolio that gave them stability and liquidity.
When I started, I brokered a few notes at first. Even those notes were brokered to investors with either an option to buy them back or a joint venture agreement. I entered into paper investment as a way to enhance and turbocharge my real estate investment. I always saw the profitability of owning the notes and never viewed the industry as the “job” of brokering notes for a commission. I therefore learned how to cultivate and work with private investors.
The greatest profits are in owning the notes. I may make ten to twenty times the profit in owning the note as a broker might make in a commission on the same note. I believe beginning “investors” ought to broker a few notes at first, while they learn the business - but the ultimate goal should be building their own portfolio. It isn’t hard, it is just little known and generally not taught in the “seminar mills”.
There is an article about financing paper in this section that helps describe the process with an emphasis on working with private financing.
Re: questions - Posted by Bud Branstetter
Posted by Bud Branstetter on October 30, 1998 at 21:33:30:
Specifics, check out Noteworthy’s site at http://www.slip.net/~jrichard/
Under products-Direct Connect
13 dead deals - Posted by John Behle
Posted by John Behle on October 31, 1998 at 14:19:36:
A few years ago I ran into an agressive young note investor. He had been through someone else’s course and been taught the exciting world of being a “bird dog” for the funding companies. At the time I talked to him, he had found 13 notes that he had taken to one of the largest funding companies. All had died while waiting for the lethargic money monster to move.
I taught him how to work with private investors and he has been very successful since.
Another young broker nearly took over his local market. When the funding source just dumped him and dropped 31 deals they had committed to fund, he literally found the damage ir-repairable and left the state. ALWAYS - have a backup investor and ideally funds you control.
Even if brokering is the goal or the way someone starts, it still pays to have “interim funding” - the ability and funds to snap up a deal while you wait - as the owner, not broker - for the funding source to investigate the shoe size of the payor.
Re: 13 dead deals - Posted by Ken
Posted by Ken on October 31, 1998 at 17:15:24:
I agree with your comments. As I said before I brokered in the beginning as I did not have a choice. As your example, I also had been through someone else’s course and sold notes only to them. We lost some money waiting on them to fund. We also made excellent money by brokering, which I think is a good way to start, as it now allows us to buy for our own portfolio. I haven’t lost any notes yet because we can normally close quickly.
But, I do agree, any broker needs more than one source of money, even if its another investor. Large investors may sometimes pay more than I, but that hasn’t slowed me down, closing quickly helps with that. As you say, “while they are checking the shoe size of the Payor” with our own money we can take the note off the market and then look for someone else to buy it at our own leisure. I started in July this year buying for my own portfolio and already control over $600K in notes. Put $20K in my pocket and still own several notes. Some of those would have been lost waiting on some of my other “funding sources”.
GREAT JOB! - Posted by John Behle
Posted by John Behle on November 01, 1998 at 11:30:27:
What a start. That is very impressive. $600k in notes in 4 months and an average of $5k per month is a tremendous accomplishment. Learn to work that portfolio now. There are over a hundred techniques to fix up and improve the yields of notes. You can easily double your yield and turn this into an incredible cash cow.
Re: GREAT JOB! - Posted by Ken
Posted by Ken on November 02, 1998 at 07:07:37:
Thanks John
I know that one way to increase the yield is to get the payors to increase their payment to me. Example: Tell them I would cut their interest rate if they would double their payment.
Do you have any materials that explains the other ways to improve the yield on notes? I would be interested.
Thanks
Ken