Is there still an opportunity in brokering notes?

Question

I spoke to a company who buys notes and he told me to basically stay away from this industry for the time being as there is really no money being made for the work involved... He said that the only people making money in the note business are the scammers selling "training courses" and I'm just curious if anyone has a different opinion on this?

Patrick Karbon · Answer

Hello Tmkl, First off, I have to ask- is your name pronounced the same way it's spelled? Thank you. Secondly, I can't believe I just came accross your post as my partner Kevin and I just got out of a meeting with a CPA who was referred to us by a friend. The CPA was interested in our company because we create and sell Performing Residential Notes in the South Eastern Michigan market to our investors utilizing their Self Directed IRA's. We've had very lucerative success with notes and have passed that wealth-building system onto our clients. In my experience, notes are one of the best ways, especially now, to generate wealth in real estate. Although maybe a little harsh, your friend isn't totally wrong about those selling the courses. It's true that a lot of 'guru's' out there sell courses and have barely even done one deal in the arena they proselytize. Can I get bonus points for that word? Anyway, keep looking and please seek out other opinions from investors who have been successfull in selling notes. If you get into the note business you're eventually going to have to speak with an SEC Attorney among tax professionals to make sure you're operating within the law. Feel free to PM me if you have other questions on legitamate notebuying strategies. Best, Patrick Karbon Customer First Homes, LLC

Don Konipol · Answer

Disagreement is what makes horse races, and apparently real estate investing! Alysha, can you provide us with a little more detail on the number of notes you have brokered, over what period of time, and whether this endeavor was full time or just part time to take advantage of a current opportunity? Are you currently brokering notes? If so, how do you generate business?

Don Konipol · Answer

I'm afraid I have to be the bearer of bad news, but note brokers are a dime a dozen. Everyone who has signed up to take a course on note brokering (usually because they had limited or no success as a real estate investor) has a generic website that is the same as all the 10,000 others. The dream is that people with notes to sell will come to you. The reality is that if they do call you they are also calling 10 other note buyers, including some direct buyers who can bid higher than you can offer since they are eliminating your commission. In every business, there needs to be an economic justification for the fees that business is charging. In a web based society, what is the economic justification for the middleman when the seller can contact the buyer directly? The only way to be successful in note brokering is to flood the local market with advertising, or launch a unique and difficult direct marketing campaign. I usually receive 2-3 letters a week from note brokers offering to purchase my notes so obviously direct mail is over used. You would probably have to develop a source of note holders and cold call them, a thankless and difficult task if there ever was one!

Kevin Kaczmarek · Answer

I just read this post so sorry I am late to the party. Thomas, brokering notes can be done in this market you just need to work hard, get past all the "no's" out there and most importantly make your own deals happen. I have moved 18 notes in the last 30 days and I do no marketing whatsoever. I network with people everyday. In fact, I keep a sticky note of tasks on my desk everyday and one of my required tasks everyday is "setup 2 new meetings". When I get to these meetings all I do is talk to people and find out what their needs are. Thomas if you are like me, when they tell me I can't do something, that motivates me to no end to prove them wrong. Notes can be sold everyday, the right way. You can do it!

Steve Sparks · Answer

Kevin is right. There is money to be made here. I buy NPN myself but that has led into some brokering. It is hard to make the relationships with the direct sellers but once you have them you can leverage you relationships to broker notes. Work on that end..the product. Buyers are easy to find. Good Luck! Steve

Alysha Duran · Answer

I disagree. You can build a nice business with a few direct buyer and seller sources. I happened to work for a broker who did hard money loans. I bought a note and then a few of my investor contacts inquired and I was able to broker some from the same source. I've never sent a single piece of direct mail.

Tmkl Unise · Answer

Hey Patrick, Thanks for the response! And no my name isn't tmkl it's Thomas. Tmkl is usually a screen name I use but I signed up using my phone the other day and by accident I put my name wrong. As far as this business goes all I'm looking to do is find buyers and sellers and make a cut. Would I still need to spear to an attorney for that? I mean I'm 23 and a little strapped for cash. The cash I do have I wanted to allocate to marketing and do what I do best and sell. What do you think, would it be better for me to explore other ventures?

Account Closed · Answer

There are a number of people here that buy and sell notes. I'm sure there are scammers, but there are serious note buyers too.