3 Reasons that most Note Investors fail

[Martin Saenz]

3 reasons that most note investor's fail:

1) Fear that leads to half steppin’. I’m not a fan of rap music but I do like this song from Big Daddy Kane which is titled, “Ain’t No Half Steppin’”. What prevents most note investors from going the extra mile is fear. The note space is very complex and holds a lot of pitfalls. People understand how the numbers work but there is an air of mystery regarding how to obtain the cashflow. What I see over and over is someone will fish around the internet, read a few books, attend a few seminars, and perhaps buy a few notes without proper due diligence which tends to lead to negative results. I never see these folks beyond a 6 month point.

I also find folks that get some formal training but don’t go the full distance with that trainer. They hop around to other people trying to fill voids with their knowledge deficiencies. This too I see on a weekly basis.
2) Lack of capital. I’ve bootstrapped most of my business life. Even when I obtained some success, I still lived with a survivalist mentality…so I get it. What I see happen often is these folks look to broker deals or set themselves up as an expert so they can take down some passive dollars from someone. What happens is they spend more time gaining expertise in branding then in learning how to note invest (i.e. proper due diligence and workout skills). Hence, the disaster train leaves the station.
3) JV partners. I've seen horror stories on both the passive side and the expert investor side. Passive folks find ‘so called' experts only to find that the experts aren't communicating well and don't know what they are doing. I've know plenty of expert investors that get passive investors and don't set up the relationship expectations well from the beginning. This leads to passive investors constantly nagging the expert to the point of exhaustion. This is assuming that the expert has been communicating well to this point, of course.

My heart goes out to people in each stage because they are all people that want more for themselves and their families. The best message I can relay is to education yourself, first and foremost. Then, map out your systems carefully. This will help you gain confidence to move to the next step whether that is picking up a few notes or connecting with some partners (that you set up strong expectations up front).