Notes

[Jervy Bingley]

Hello everyone! I I just joined Bigger Pockets. I want to learn everything about NOTES. Where do I need to start? 

[Llerone Lawrence]

Hi Jervy,

I started in the note business almost a year ago and left my job managing a group of software engineers about 6 months ago to dedicate myself to the industry full time. You have a few options when it comes to getting started in the business. I think all will get you in the door, it's really up to you to match the path with your personality and goals.

1. Get involved in a note education program - There are a number of programs out there that do a good job of teaching you the ins and outs of the note business. I would advise to get up to speed on some of the basics before getting into these programs however. Within the note space there are specific niches and you want to be sure that your selected education program matches with what your investment goals are and your risk tolerance. For example, you should know if you want to invest in 1st liens or junior liens. Are you investing for cashflow or capital gains? Again, questions you should answer before choosing a program for you. Once you have these basics down you can determine which training program would be best for you. Some programs that come to mind include (Note School, NNG, WeCloseNotes)

2. Immerse yourself in the community - Attend conferences with the goal of networking with other investors and picking up information from presentations. Some of the information may feel like it goes over your head, but you'll find the combination of networking with other investors and the information presented to be valuable. Some popular events are NoteExpo and PaperSource 

3. Be a JV partner with an experienced investor - This allows you to have some skin in the game, while learning from an experienced investor. You can see what parts of the industry you like and what doesn't work for you. If you are clear with your partner that you are using the JV as a learning vehicle then you should request exposure to all areas of the business. Everything from asset acquisition, pricing, exit strategy, borrower management and vendor management and details such as learning to read credit reports, inspecting collateral files and all the little things that you'll need to learn.

4. Find a mentor - Another great way to learn the business. This is how I got involved in the business, I was fortunate enough to find a great mentor that in addition to a learning program allowed me to schedule 1-1 calls to answer questions and help me navigate the space. He no longer is taking on students but by using the community you may be able to find a seasoned investor willing to mentor you.

5. Buy a note - Learn along the way. I would be remised if I didn't put this option. This way of learning has some pros and cons. On the upside your going into the business untainted by outside opinions and you can formulate your strategy on your own. The direct flipside of this however, is that you will make mistakes that will cost you money since you would be flying solo. 

In my opinion using a JV partnership as a learning vehicle is your best option. You get to make money while learning from a professional in the business.

Happy Investing,

Llerone