I wanna invest in notes

[Don Konipol]

Yesterday, I had an earnest young person contact me, telling me that they wanted to “invest” in notes, and asking for my advice.  When I inquired as to how much money this person wanted to invest, they said they had very limited capital but “understood” that notes can be a very profitable business.  I then asked the. To describe the type of “business” they had in mind; they were unsure, but it seemed to be somewhere between brokering notes and syndicating notes.  Of course this person was not really cognizant of either, they were just trying to get a handle of this type of career. 

Because this person took the initiative to contact me and at least thought about an entrepreneurial type activity, I took the time to inform them as to what I perceived as how they could best proceed.  Needless to say they were extremely disappointed that it would take an extensive amount of education in real estate; saving capital (there’s little chance of a “newbie” raising capital without a significant personal investment), and experience in the same or similar fields.  This persons comment to be was to ask if there wasn’t a “faster, easier” way to “get into” this business.  Well…..President Trump DID start with a SMALL $50 million loan from his father…..  Of course Trump had been working for his father from the age of 11; studies real estate for 4 years at the Wharton School of Business, and ran his own business as a teenager owning the washing machines and dryers in his fathers residential buildings.  

People want to be in business “for themselves”, they want high income, wealth accumulation, and “status”.  What most DON’T want to do is put in the time, effort, sacrifice, and capital necessary to achieve that goal in real estate.  And it is at this crossroads where the so called “gurus”; people selling that $20k - $75K “mentorship’s” live.  They promise it’s all achievable without studying and understanding real estate principles, real estate law, and real estate finance; without personal capital to invest; and without experience.  Since this is patently untrue, the failure rate of people who buy into these programs is astronomical.  

In my 45 + years in real estate, I have observed some people who were successful after buying into one of these mentorship programs.  But, these were people who already had education/knowledge, capital and experience. What they lacked was CONFIDENCE, they were scared to move forward, and going the group route somehow emboldened them.  

[Chris Seveney]

Quote from @Don Konipol:

Yesterday, I had an earnest young person contact me, telling me that they wanted to “invest” in notes, and asking for my advice.  When I inquired as to how much money this person wanted to invest, they said they had very limited capital but “understood” that notes can be a very profitable business.  I then asked the. To describe the type of “business” they had in mind; they were unsure, but it seemed to be somewhere between brokering notes and syndicating notes.  Of course this person was not really cognizant of either, they were just trying to get a handle of this type of career. 

Because this person took the initiative to contact me and at least thought about an entrepreneurial type activity, I took the time to inform them as to what I perceived as how they could best proceed.  Needless to say they were extremely disappointed that it would take an extensive amount of education in real estate; saving capital (there’s little chance of a “newbie” raising capital without a significant personal investment), and experience in the same or similar fields.  This persons comment to be was to ask if there wasn’t a “faster, easier” way to “get into” this business.  Well…..President Trump DID start with a SMALL $50 million loan from his father…..  Of course Trump had been working for his father from the age of 11; studies real estate for 4 years at the Wharton School of Business, and ran his own business as a teenager owning the washing machines and dryers in his fathers residential buildings.  

People want to be in business “for themselves”, they want high income, wealth accumulation, and “status”.  What most DON’T want to do is put in the time, effort, sacrifice, and capital necessary to achieve that goal in real estate.  And it is at this crossroads where the so called “gurus”; people selling that $20k - $75K “mentorship’s” live.  They promise it’s all achievable without studying and understanding real estate principles, real estate law, and real estate finance; without personal capital to invest; and without experience.  Since this is patently untrue, the failure rate of people who buy into these programs is astronomical.  

In my 45 + years in real estate, I have observed some people who were successful after buying into one of these mentorship programs.  But, these were people who already had education/knowledge, capital and experience. What they lacked was CONFIDENCE, they were scared to move forward, and going the group route somehow emboldened them.  

 My path was similar to Chad, and when I got started I had managed in todays dollars over $1B+ in real estate for work. 

What people are told many times is they can 2x or 3x their money with notes which is rarely the case. For those starting with $20-$30k , you can make 10-20% on a note, so that is $2-$6k per year. Can you grow it faster (yes as I did), but I got lucky and am an outlier like Chad. But everyone wants to get rich quick.,

This is why I see people who will say "i want to buy a note and make 12%" and want the perfect note and sit on the sidelines for a year waiting for that opportunity intsead of buying  a note at 10% which OMG the $400 difference is going to break you - when you get started education takes precedence over profits in my mind, yes you want to be profitable but will you learn more giving up $400 on a note or spenidng another $2500 on some course?

Glad you shared this Don, as I am always told I am too pessimistic, but I am more a realist.