The Note Business May Not Be for You!

[Martin Saenz]

I know that trainers want to sell you training, fund managers want you to invest in their fund, JV experts want you to partner with them, and attorneys want more files to work.With that said, newer folks need to think very hard about why they want to enter into Note Investing (NI). Every week, I speak to nice folks that have no business considering this industry due to various reasons. The main reason I find is they are seeking Note Investing as a band aid for their current situation versus an enhancement to their current situation.

Just to give two examples: I spoke to someone this week who is nearing retirement and doesn’t have much in the way of capital. They are exploring our industry as a way to play rapid catch up. When I speak to good folks like this, it's usually concluded that they got the impression that NI is somehow easy to do and will bear massive rewards in short order. I typically leave the conversation encouraging them to do more research and exploring (what else can you tell someone). The week prior, I spoke to someone who overextended themselves in real estate and owes a lot of investors money.

They were seeking NI as a way to offset their over leveraging. I don’t look to pass judgment on anyone and my heart is set on helping people learn this industry, however I do my part steering some folks away from the industry. I know some others in the BP group do the same!

[Andy Mirza]

Good post. I would add that newer investors are attracted to notes because it seems a lot more passive than fix and flips where you might have to go to the property, deal with contractors and rehab, etc. Notes can be done right from your desk and all you need is a computer, an internet, and a phone to do business. There is the learning curve that some newer investors ignore. They see the potential profits, stay focused on that, invest time and resources, and drop out when it's a lot more difficult than they anticipated. I believe that you'll see a lot of these folks interested in fix and flips, rentals, multi-family, etc, for the same reasons. They get excited by the presentations and want to be part of whatever is being touted. There's a lot of attraction for all kinds of get-rich-quick schemes. I think that notes are like other industries in that you put in the hard work, gain the experience you need, and THEN it gets easier to make more and more money.