Finding Note Sellers - Most are doing it wrong

[Chris Seveney]

Wanted to share this as I am seeing a lot more activity with investors looking to get into note investing, and thought I would share my opinion on finding note sellers as I feel a lot of people are led in the wrong direction.

What I mean by that is people think its a numbers game, the more sellers you have the better deals you get, which it is actually the opposite.  The first thing you need to figure out how many notes you anticipate on buying in the next 12 months. If it is under 20, there really is no need to spend a lot of time chasing down note sellers, especially calling banks (which honestly rarely works). Find 1-3 sellers and bid on their product, show interest and get to know more about them. Why do I say that? Because if you get 20 sellers and get all these tapes and never buy from them, you are just another window shopper in their eyes. If you are closing deals with a seller, they will remember you. If you also run a smooth transaction and close in a respectable time without causing a lot of drama, they will absolutely remember you and eventually will start sending you deals and say "hey, you want this note for $20k".

You are far better off having a handful of sellers that you buy from periodically then a large list of sellers you never buy from. This is not to say you cannot have 20 sellers who you periodically email to see if they have assets. You definitely can find tapes that way - but I have found the best deals to occur from those who I buy the most from.

As always, love to hear others feedback and opinions on this topic. 

[Jamie Bateman]

@Julie McCoy I rarely deal directly with borrowers for a few reasons: 1) I want to remain objective in my decision making and some borrowers can be pretty crafty, 2) potential legal/compliance issues, 3) it's difficult to scale your business if you are constantly contacting borrowers yourself. With that said, there are instances where it makes sense to have direct contact. And I have never cold-called a bank looking for notes.