A day in the life of a full time note investor
Rental Property Investor · Spartanburg, SC · Member since 2017 · 51 posts · 17 votes
A day in the life of a full time note investor
Most Popular Reply
Investor · Kingston, WA · Member since 2008 · 1k+ posts · 1k+ votes
7yMy day:
- Meditate
- Read news feeds, 1st coffee
- Read new email from overnight
- Sort today's tasks/2-do's, second coffee
- Walk with wife and dog
- weekly phone conference with partners
- respond to emails
- review collateral files on new offers
- review assets on new tapes
- compose offers on new assets
- lunch
- review servicing notes on problem assets
- email review/response with vendors/counsel on foreclosures and REO props
- check tasks in Google and Insightly
- assign tasks to VA
- dialog with partners on Basecamp
- afternoon walk with dog or go to gym
- final email/task review, defer/snooze non-critical items
- dinner with family
- couch surfing
Next day
- repeat previous day
All of the above beats having to deal with tenants and contractors any day of the week!
25 Replies
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
I have mainly originated notes over the years and the notes I have bought I bought them to foreclose on and take the asset not for long term.. cash flow.
from what I see origination of course is an ongoing job..
buying notes has its own set of disciplines..
but I think you have two very different categories of notes.
1. Owner occ in the US
2. commercial loans in the US.
number 1 lots of rules to follow and some pretty good penalties if you don't.
Number 2 no real rules as it relates to how you treat the borrower.. less of them tend to be larger
but easier to manage in my mind for those collecting on them.
and I guess there is number 3 loans on dirt.. I grew up in that industry.. its a niche but can be very profitable..
- Fund Manager · Philadelphia, PA · Member since 2019 · 41 posts · 52 votes7y
@Adam Johnson to be effective in the note business, you must focus consistently and equally on what are the three pillars: capital, deal flow, and note administration. If you neglect any of them, your business and your progress will be significantly impacted.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
but yes I think the note business is run from a static location or where ever you are in the world at the time.
its when you have to take a property back that things can get dicey and the real work begins..
- Investor · Kingston, WA · Member since 2008 · 1k+ posts · 1k+ votes7y
My day:
- Meditate
- Read news feeds, 1st coffee
- Read new email from overnight
- Sort today's tasks/2-do's, second coffee
- Walk with wife and dog
- weekly phone conference with partners
- respond to emails
- review collateral files on new offers
- review assets on new tapes
- compose offers on new assets
- lunch
- review servicing notes on problem assets
- email review/response with vendors/counsel on foreclosures and REO props
- check tasks in Google and Insightly
- assign tasks to VA
- dialog with partners on Basecamp
- afternoon walk with dog or go to gym
- final email/task review, defer/snooze non-critical items
- dinner with family
- couch surfing
Next day
- repeat previous day
All of the above beats having to deal with tenants and contractors any day of the week!
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Bob Malecki:
My day:
- Meditate
- Read news feeds, 1st coffee
- Read new email from overnight
- Sort today's tasks/2-do's, second coffee
- Walk with wife and dog
- weekly phone conference with partners
- respond to emails
- review collateral files on new offers
- review assets on new tapes
- compose offers on new assets
- lunch
- review servicing notes on problem assets
- email review/response with vendors/counsel on foreclosures and REO props
- check tasks in Google and Insightly
- assign tasks to VA
- dialog with partners on Basecamp
- afternoon walk with dog or go to gym
- final email/task review, defer/snooze non-critical items
- dinner with family
- couch surfing
Next day
- repeat previous day
All of the above beats having to deal with tenants and contractors any day of the week!
lucky the dog gets two walks a day.. !!! Do you ever find yourself out in the field at all ???
- Lender · Ladera Ranch, CA · Member since 2014 · 1k+ posts · 1k+ votes7y
I love what @Fred Moskowitz said about the three pillars! However, I disagree on the proportions because everyone and their needs are different. For me right now, it's more like 70% capital, 5% deal flow, and 25% note/business administration.
I go to the office 3-4 days a week and generally work from 9 am to 3 pm. BTW, this is for a non-performing note business. The other days I work from home and work extra hours when emails come in or tasks need to get done. I work this way because I'm the spouse with a flexible schedule, which also means I get to spend a lot more time taking care of the kids (no regrets, I love my kids and it is what it is). So, I get to work Mon through Fri and take most of the weekends off to make sure I am present when with my family.
On the days that I do go into the office, I take care of the following items in no particular order. Whatever's the most important gets taken care of first:
1. Check my ongoing task list - I put all my tasks into a report in Smartsheet. It shows me the last three days and up to 6 months in the future. When a task shows up for my day, I either get it handled or I postpone it. That way things don't fall through the cracks. I have a lot less fires to put out nowadays because once I put a task in my system, it doesn't get forgotten until the due date.
2. Read and respond to e-mails - Our vendors typically respond Mon through Fri during business hours. When some task gets completed, I acknowledge it, save files where necessary, and work on the next step in the process. I want to hit the ball back in their court during business hours so tasks get completed as soon as possible. If I cause the delay, then I'm the one moving back the estimated liquidation date and I want to minimize that.
3. Discuss business needs with my partner - my partner and I work the best when we're in the office together. We've established a good relationship so that we can make decisions and get things done through e-mail and phone calls but being at the office in person is always the best. When it comes to acquisitions, the more time in the office results in better outcomes.
4. Focusing on the "Important but not emergency" things to build the business - things like expanding web presence, building out an investor platform, developing systems to increase efficiency and workload capability, etc.
When I'm in the office, it's pretty intense. I'm working the whole time, concentrating on tasks, and problem solving. Typically, I'm wiped out by the time I leave work. The sign that it's time to leave is when I have no more mental juice to handle problems. I feel like when I get better at raising capital and it's no longer a critical issue, I'll be able to scale back the intensity. I'll have the means to hire more outside help, transition management of the notes, and focus on my higher value activities (and enjoy some more free time!)
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes7y
@Adam Johnson
Depending on your financial situation, if your working full time right now One thing I will throw out there is you need to map out what you need for income to do this full time. That is the most challenging part and will not happen overnight. With non performing notes the cash flow is inconsistent. I made great money the first quarter because we closed out a bunch of deals and this quarter was slow as we are working out a lot of deals. It is not consistent (which is why I recommend converting $ made from deals into performers for cash flow after you take your salary).
This will also depend on how much you do. Some people will do borrower workouts others will not. Some people will foreclose to take the property back as an REO and rehab it. All these things add to what needs to be managed.
7e investments53 Reviews - Member since 2019 · 38 posts · 32 votes7y
Following this thread, also curious. Can anybody responding to this thread that deals in notes recommend books/resources? I've listened to a few BP podcasts on the topic but am curious to learn a bit more.
@Bob Malecki When do you find the time to take a nap?
- Member since 2019 · 4 posts · 5 votes7y
@Adam Johnson for me my question is what is a note? Like a lien or a tax note?
I am in acquisition mode right now, so the better part of my day is spent reviewing tapes with the majority of it on due diligence on accepted offers. In this business, the old adage of "you make your money when you buy" could not be more true.
The other part of the day is managing the vendors, REO's and asset management of the existing notes, which can sometimes take way more time than should, but in order to to succeed in this business you need to deal with issues as they arise and have a solid system in place to track everything.
And unless you have a solid capital base from which to start, I wouldn't suggest jumping in with both feet until you've built up a sizeable portfolio, since as Chris mentions above the cashflow is very inconsistent.
- Investor · Kingston, WA · Member since 2008 · 1k+ posts · 1k+ votes7y
@Jay Hinrichs all of the assets in my various company's portfolios are out of state so I'm not in the field at all. My travels are either conferences out of town or to the bank to initiate wire transfers. Yes dog is lucky with 2 walks a day and frankly both of us need the exercise!
@Bob B. Nap? I've heard of those.........! My dog has volunteered to fulfill that task, just about all day long:
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Bob Malecki:
@Jay Hinrichs all of the assets in my various company's portfolios are out of state so I'm not in the field at all. My travels are either conferences out of town or to the bank to initiate wire transfers. Yes dog is lucky with 2 walks a day and frankly both of us need the exercise!
@Bob B. Nap? I've heard of those.........! My dog has volunteered to fulfill that task, just about all day long:
most folks on BP say they are doing this so they can spend more time with their kids.. when in fact we really want to spend more time with our dogs :) Kids we just want them to grow up and get out of the house.. now grandkids that's another matter.. LOL
- Rental Property Investor · Spartanburg, SC · Member since 2017 · 51 posts · 17 votes7y
Thank you all for your replies!
I am planning to get into the owner occupied residential note space; commercial loans sound like they can be a great strategy, but I haven't looked into them enough yet to seriously consider it. I'd rather not jump into non performing notes until I have a few performing ones under my belt so that I can get a reasonable grasp on the business before having to delve into workouts/foreclosures.
Thank you, a play by play of the work day was exactly what I was looking for! You mentioned that you have several notes owned by several companies; are you bundling them in LLC's in groups of 5/10 notes each?
I really like the idea of putting your "to do" list into a Smartsheet; at my current job I also make myself a list of targets to achieve for the day and remove them as they are completed; I find this is very helpful in remaining productive and taking care of the important items that need to be completed! Do you prefer to have a physical office space as opposed to working from home? I can see where this would be beneficial to keep yourself from getting distracted.
I do have a bit of a business plan laid out; I will remain in my current position at work until I can reach $5k per month in income from the note business. At that point I will be making slightly more than I am now, after that comes stage 2 which is to scale to $10k per month in income and possibly $15k for the long haul if it is necessary. One of the major benefits of focusing on the non performing notes side is that you can get some pretty huge payoffs if you get involved with the right assets; I definitely understand how the cash flow can vary depending on if you can get the borrower reperforming or if you have to pursue a foreclosure; I've heard Scott Carson mention that he started off in the note business with the idea that he would pursue foreclosures instead of workouts but in the end reversed his decision. Which do you prefer to do if possible?
I would recommend the we close notes podcast, the good deeds note investing podcast, and note school for podcasts/youtube videos as well as the information that you can find on Bigger Pockets. As far as books are concerned I would recommend checking out Invest in Debt by Jimmy Napier, Paper Profits by Joshua N. Andrews, and How to Invest in Debt by Michael Pellegrino for starters.
I'm looking for information from investors that are pursuing the residential note space currently, as related to single family home mortgages mostly. A "note" in itself can be any form of a promise to pay, and that can be affixed to a tax note, a tax lien, a home mortgage or even a personal check.
@Chad U. -
Thanks for the reply! Would you mind talking about a few of the more common issues that arise in the note space and what kinds of systems you have in place to deal with them? Also if you could advise people beginning in the note space on the best way to start, what would you tell them? It seems that the real estate market is in a bit of a peak right now, are there some things that you need to watch out for as a note investor when the market is at a high?
Thanks again for all of the replies, it's more than I had hoped for!
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Adam Johnson:
Thank you all for your replies!
I am planning to get into the owner occupied residential note space; commercial loans sound like they can be a great strategy, but I haven't looked into them enough yet to seriously consider it. I'd rather not jump into non performing notes until I have a few performing ones under my belt so that I can get a reasonable grasp on the business before having to delve into workouts/foreclosures.
Thank you, a play by play of the work day was exactly what I was looking for! You mentioned that you have several notes owned by several companies; are you bundling them in LLC's in groups of 5/10 notes each?
I really like the idea of putting your "to do" list into a Smartsheet; at my current job I also make myself a list of targets to achieve for the day and remove them as they are completed; I find this is very helpful in remaining productive and taking care of the important items that need to be completed! Do you prefer to have a physical office space as opposed to working from home? I can see where this would be beneficial to keep yourself from getting distracted.
I do have a bit of a business plan laid out; I will remain in my current position at work until I can reach $5k per month in income from the note business. At that point I will be making slightly more than I am now, after that comes stage 2 which is to scale to $10k per month in income and possibly $15k for the long haul if it is necessary. One of the major benefits of focusing on the non performing notes side is that you can get some pretty huge payoffs if you get involved with the right assets; I definitely understand how the cash flow can vary depending on if you can get the borrower reperforming or if you have to pursue a foreclosure; I've heard Scott Carson mention that he started off in the note business with the idea that he would pursue foreclosures instead of workouts but in the end reversed his decision. Which do you prefer to do if possible?
I would recommend the we close notes podcast, the good deeds note investing podcast, and note school for podcasts/youtube videos as well as the information that you can find on Bigger Pockets. As far as books are concerned I would recommend checking out Invest in Debt by Jimmy Napier, Paper Profits by Joshua N. Andrews, and How to Invest in Debt by Michael Pellegrino for starters.
I'm looking for information from investors that are pursuing the residential note space currently, as related to single family home mortgages mostly. A "note" in itself can be any form of a promise to pay, and that can be affixed to a tax note, a tax lien, a home mortgage or even a personal check.
@Chad U. -
Thanks for the reply! Would you mind talking about a few of the more common issues that arise in the note space and what kinds of systems you have in place to deal with them? Also if you could advise people beginning in the note space on the best way to start, what would you tell them? It seems that the real estate market is in a bit of a peak right now, are there some things that you need to watch out for as a note investor when the market is at a high?
Thanks again for all of the replies, it's more than I had hoped for!
to get to 5k a month in note income.. one would need 300 to 500k in cash.. If you chose to broker performing notes in states that have non owner occ commercial loans that don't require a license that is pretty easy to do..
- Rental Property Investor · Spartanburg, SC · Member since 2017 · 51 posts · 17 votes7y
to get to 5k a month in note income.. one would need 300 to 500k in cash.. If you chose to broker performing notes in states that have non owner occ commercial loans that don't require a license that is pretty easy to do..
@Jay Hinrichs Thanks for the tip! Would you be able to recommend a source where I could learn about how that process is done? In essence this sounds like becoming a real estate agent for commercial properties just without the real estate license.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Adam Johnson:
to get to 5k a month in note income.. one would need 300 to 500k in cash.. If you chose to broker performing notes in states that have non owner occ commercial loans that don't require a license that is pretty easy to do..
@Jay Hinricks Thanks for the tip! Would you be able to recommend a source where I could learn about how that process is done? In essence this sounds like becoming a real estate agent for commercial properties just without the real estate license.
sure just pop on to every HML s website and you will usually see a tab for broker submissions
and join appl association of private lenders.. many of those are brokers.. go to their vegas event meet all sorts of senior lenders. yoyu work for points.. and have no monetary risk other than time.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes7y
@Jay Hinrichs - are you a member of AAPL - I considered joining but was curious how it is and if it’s worth it.
If you are a member and you think it’s worth it can send me a referral - thanks
7e investments53 Reviews - 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Chris Seveney:
@Jay Hinrichs - are you a member of AAPL - I considered joining but was curious how it is and if it’s worth it.
If you are a member and you think it’s worth it can send me a referral - thanks
I joined for a year and went to one event.. lots of private lenders.. there and the event is full of HML ers and servicers and such.
for me the education part of course was not anything of value.. and my network is pretty robust as is.. but for those looking to break in and or scale I think I could be worth it..
its more skewed though for origination than buying existing paper.. and its basically all NON owner occ.. which as you know is my sand box..
no longer member so cant help U on referral.
@Adam Johnson
Theres a big difference between a performing note and non performing in terms of issues. If the borrower continues to pay, life is good and why its referred to as mailbox money.
There are numerous issues when it comes to non performing notes, way too many to mention here. But one of The most common issues is generally managing the servicer - staying on top of them and providing direction. If you are not proactive and rely on the servicer to work it out, then your note will most likely continue to non perform. For this you need a good tracking or project management system especially when you get numerous notes so that it will set reminders of when to follow up with legal, servicers, insurance, realtors, etc.
Things to watch out for: toxic assets, joker brokers, not knowing what to pay, etc. Get some good education before starting in this niche and buy a low valued NPN to start off, as there is no better way to learn than to do.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Chad U.:
@Adam Johnson
Theres a big difference between a performing note and non performing in terms of issues. If the borrower continues to pay, life is good and why its referred to as mailbox money.
There are numerous issues when it comes to non performing notes, way too many to mention here. But one of The most common issues is generally managing the servicer - staying on top of them and providing direction. If you are not proactive and rely on the servicer to work it out, then your note will most likely continue to non perform. For this you need a good tracking or project management system especially when you get numerous notes so that it will set reminders of when to follow up with legal, servicers, insurance, realtors, etc.
Things to watch out for: toxic assets, joker brokers, not knowing what to pay, etc. Get some good education before starting in this niche and buy a low valued NPN to start off, as there is no better way to learn than to do.
Bottom line this is a business this is not passive investing .. much more too it.. and the level of sophistication of the investor/money has to be far greater than that of a simple landlord situation.. one becomes very versed in how foreclosures work how to work with the BK courts how to deal with attornies and servicing companies like you talk about.. LOL .. Me personally have never bought an owner occ note only commercial and as such we always service our own.. except for zimple money were they collect payments but that's it rest is hands on..
- Investor · Kingston, WA · Member since 2008 · 1k+ posts · 1k+ votes7y
Originally posted by :
Thank you all for your replies!
Thank you, a play by play of the work day was exactly what I was looking for! You mentioned that you have several notes owned by several companies; are you bundling them in LLC's in groups of 5/10 notes each?
Thanks again for all of the replies, it's more than I had hoped for!
Hi Adam, I was founding partner on 2 private equity funds that deploy investor capital into both first and second resi distressed debt. I also manage a multitude of JVs with individual investors and also hold notes in an LLC owned by my Roth SDIRA in partnership with 2 other SDIRAs. These activities seem to keep me off the streets and butt glued to the office chair!
Bob
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@Chad U. I have to revise my statement of never buying owner occ I did buy probably 10 of them in the mid 2000s when I had a pipeline into a thrift in Oregon they would sell me their NPN about 10 days before the foreclosure they all went to sale and I either got paid off by 3p bidders or I got the asset my only reason to buy the notes was to get the asset.. one I built an 8 unit on.. its was a screamer deal.. it was an old SFR and the thrift had it valued like it was an old crappy house.. not value for the upzone or HBU or increased density.. those are my kind of deals.
- Lender · Ladera Ranch, CA · Member since 2014 · 1k+ posts · 1k+ votes7y
@Adam Johnson I prefer going to the office but work from home when or as needed. It's like going to the gym for some people. You can workout at home but the act of going to the gym and be surrounded by others doing the same thing can make it easier to actually do your workout as opposed to being a lot easier to flake out when you're at home. Personal preference.
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