Questions about note servicing

[Antonio C.]

Hello, I'm new to this forum and also new to notes. Seems like an investment I might be able to get into. I already own a rental and want to diversify our investments. For those of you who had bought notes in the past, how to manage "the day to day". Does the tenant send you a check directly to you, or are there servicing companies out there that handles that for you. If so what's their typical price?

[Chris Seveney]

@Andy Mirza

You are 100% correct. I agree as well as its another part of the business. I have shifted and sent most of my loans to allied for $18.50/month and it has saved me thousands per month. The biggest hurdle I have with the servicing is the risk/liability. One being licensing, as when you run funds if you have an employee they need to be employed by every entity to stay within "self servicing". Some states still require licensing from self servicing if I recall. Then when I looked at training someone and managing them, I am at around $4k per month in fees which is $48k per year. Yes I could probably get someone for around $35k-$40k per year but then when you think about mailing monthly statements, tax forms etc. to me it was not worth it. 

If I were to add the servicing side my thought would be to acquire an existing company and move my loans to them, that way they have the licensing in place, as well as other forms of revenue. Yes it would cost significantly more but if it makes money then you are earning a return on it.

THere is no magic number on when to move to self servicing, its strictly a business decision, and since I am a one man show adding that to my arsenal at this time is not something I even want to consider.