Is flipping notes worth it?

[Cecilio Gandara]

Hello everyone,

I'm new to real estate and to BP as well. I recently bought into jerry nortons note flipping program. Finding out that it was a bad idea. Haven't submitted any deals yet but seems fishy. Anyway, I'm aware the flipping notes is a way to make money. Could anybody enlighten me with some information. I'd greatly appreciate it. Is it really legal to flip private and seller financed loan notes with no license? Does a real estate lawyer need to be involved in the transaction? What are some strategies to land some deals? Thanks in advance! 

[Jessica Zolotorofe]

I would definitely suggest some due diligence before going down this road. I often advise clients to steer clear for a number of reasons, but the biggest would be that you have no real security. A mortgage is key to any real estate investing deal because it secures the investment, which is exactly what is missing from note investing. You can pay to purchase a note, put the money up front (granted, at a discount, but not so if you see no return) and never see a penny. With a secured loan, even secured by a car or some equipment, or anything... you know that at a minimum you can go after the property. If an individual that signed a note has no assets, or sells everything, or files bankruptcy... likelihood you ever see anything is slim. If it's an LLC that signed the note, even less of a chance. It's a good investment for performing notes, but I would make sure you really look carefully into the circumstances surrounding each note you purchase to make sure there is a likelihood you will collect on them, otherwise you are throwing money away. When people or companies buy hundreds of notes, they can often afford the few that will inevitably not be collectible, but if you just buy a few, it's definitely a high risk business. Can be lucrative, don't get me wrong, but there is just a lot of risk involved that you should carefully consider.