All Forum Posts by: Tim Fitzgerald

Postage is the bigger expense as opposed to the cost of the leads themselves (roughly 0.20 per lead). I go with larger, color postcards, but you can cut your mailing cost down by going smaller and not going with color-- as long as the message itself is effective. Bare-bones, I would say that you should do 1,000 names per mailing at a minimum but when you scale up, it's far better to do at least 3,000 at a time. Absolute minimum total marketing investment per 1,000 leads should be somewhere around $500 (I'm usually around $850 because i get a better response rate with the larger, better cards) and let me also say that, conservatively speaking, a $500 investment can turn into $2,000 profit or more- can be much higher depending on experience level and approach. 

Yes, at least half my business comes from direct mailing individual owner carrybacks. It's a numbers game like anything else. ROI is quite nice in my experience. Not necessarily looking for 'whopper hit'... I am looking for volume. The key is in setting up a consistent direct mail program.... most of my closed business comes after several mailings, in large part because folks become motivated at different times.. at any given time, a certain % need to sell now, and these are the folks who will respond to that particular mailing. Direct mailing is a science, albeit an inexact one but it's like anything else-- you should be able to up your closing % by approximately 1 additional % point for every year of experience you amass.

@Chris Seveney offers that [most notes are owned by institutional investors] but, in any event, that's not where to look if you intent to broker or flip.

According to public records, there were at least somewhere in the neighborhood of 100,000 new seller-financed 1st position notes created in 2018 alone.

These are the notes that can be brokered or referred to an investor on an individual basis because in these cases, you are approaching the note holder directly.

You can use a purchased mailing list to reach these note holders, and you can certainly get your fair share of business by pursuing this process if done correctly.

Notes secured by commercial property can be unearthed through referral sources such as attorneys.... you may need to serve as an "educator" by offering guidance to the note holder. Seems to me many, if not most newer note people think "commercial" notes typically equate to large-scale corporate property; but small business owners (like a small factory or warehouse) take back notes, too. And, they can be bought and sold, too, just like notes secured by SFRs. And, they can be just as profitable. I love them.

Marketing to find/source notes. Vastly under-discussed topic. You need new leads coming in on a regular basis, and, ideally, you want to have several potential transactions somewhere in the "pipeline" at any given time.

I would be very surprised if you were to get much, if any, response by unsolicited texting- potential illegalities notwithstanding.

Whereas, direct mailing to a good purchased list of note holders can be quite profitable, especially once you've been at it for several months. Follow-up is key. If you just send out one mailing, that's not going to cut it over time. In my experience, most of the closed deals are unearthed on the follow-up.

@Chad U. You're way off track.. I'm suggesting that new people concentrate on the marketing/sourcing end... dealing only with direct note holders. As you've mentioned yourself (and i couldn't agree more), this is a relationship-based business. If you can source out notes, you can get them sold. I've always cautioned people to watch out for brokers posing as direct note holders or funders. I don't deal with them and I would tell anyone to keep their antennae up and avoid them like the plague.

@Chad U.

That is the grossest misrepresentation of my words that I've ever come across. I am not, have ever or ever will give out INVESTING advice.

‘Wasting note sellers’ time’?! No, I’m talking about not wasting YOUR time (if you’re new ) on notes that will never go anywhere. Countless times, over the course of my 23 years in this business, I’ve seen people new to the business performing detailed analysis on certain notes that are never going to work. .. a total waste of time. Very often, I see people who have taken a course or two but still have no idea what to look for or what a good or bad note is. What I am saying is, if you are a rank beginner, let a funder tell you it’s either good or no good if you're not sure. The best that can happen is it’s good and may end up being a potential purchase. The worst would be that the funder is not interested. They’ll also tell you why.

Best education you can get is by working with an institutional funder. You are not investing anything. You are simply referring. No risk on anybody’s part. Put another way, I am advocating NOT investing your own money and instead acting as a referral agent until you know what you’re doing. Safest, risk-free way to go about things. Institutional funders welcome referrals.

If it goes through, it goes through. Ask all of your ‘dumb’ questions of the funder.

You’re NOT submitting ‘dumb’ offers; you’re only submitting LEGITIMATE offers (through the funder who will make only on the notes that will work). You’re not risking your own money.The funder will put up the money only if it’s a note that they wish to purchase. How are you wasting anyone's time?!

You’re NOT ‘learning on other people's dime’. The funder will not put up one dime unless it’s something they want to purchase. Nobody loses.

"Bad" investing advice, on the other hand, would be what you stated you would do with $1 million dollars-- "plow it all into" NPNs and expect a monthly yield of $30K positive cash flow(?!) Really?

I think that "diving in" to something you don't fully understand is flat-out crazy IF you're risking your own money to do it. There's no need to do this.

Rather, why not REFER the notes you find to established note buyers at first? Simply concentrate on FINDING notes (marketing is the #1 skill you need to develop in this business so, in my view, you're going to need to spend 90% of your time getting good at this) and, as long as you can develop quality leads, there will be a buyer for them that will take over from there and pay you a certain amount for the referral (as long as you go about this properly-- you follow the funder's protocol).

(You want to get good at finding DIRECT note sellers as opposed to investor/resellers. Resellers can be a good source of notes once you're investing for your OWN account-- as long as you're dealing with someone reputable who may be able to get you double-digit returns for some nice passive income.)

Anyway, as you refer the notes you find, you watch what the investor does, observe what they'll accept or not accept, and for the notes they accept, you earn a certain amount without putting up any of your own money. And, for the ones they reject, you've lost nothing but you're learning what's good and what's bad... the knowledge you'll gain is invaluable. Your only investment is a little time. Not one dime.

After all, what would be your objective from "diving in" to the note arena? You want to make money, of course. But, if you're putting up X amount $ of your OWN money, you're risking that money if you don't know what you're doing yet and, if you're earning a certain return as long as nothing goes wrong, i.e. 10-12% or otherwise, it's still going to take you quite a while to recoup your investment. Whereas, if you negotiate a referral fee of $3,000- $5,000 or whatever, that's pure profit and you're not risking a thing. And, you get that money right away to parlay right back into your activities.

(I do have quite a bit of experience on the note marketing end, so I've had my fair share of good, measurable results over the past 22+ years. There's probably some of it that I can share if you want to PM me.)

The “secret sauce “ is that there is no secret sauce. True, there are many different aspects to note investing— it can’t be learned by the seat of your pants. That said, it’s like learning anything else (at least in my experience); you just put one foot in front of the other.

Of course you're going to run into "analysis paralysis" when starting out with anything of any complexity, and the note business is no different.

You would do well by just concentrating on the marketing end first, say, by developing effective ways to source "plain vanilla" performing notes, secured by either SFRs or commercial property. Line up an established funder who accepts referrals, and just submit (using their request-for-quote forms) the inquiries you get. You've got to be detailed on the clerical side, i.e. "dot the I's and cross the t's". If you don't know how to evaluate a note yet, don't worry a lick about it-- just submit. The funder will reply (provided you properly fill out and submit the forms) and if they aren't interested, they'll tell you and also they'll tell you why... keep asking your "dumb" questions and keep submitting potential note transactions until you start to recognize the good from the bad.

All of this is not costing you a dime. Just a little time.

It's like anything else- as @Chris Seveney said, most people quit ANY business when they realize it takes work and perseverance. You've got to have "stick-to-itiveness". But it doesn't have to be hard. Spend just a few hours a week honing your marketing skills, continue to develop your note sourcing methodology which is the #1 skill you need to succeed. If you can FIND quality notes, there will always be a buyer for it and a way for you to connect. Do this properly (they key is PROPERLY, as referenced in many discussion threads here) and you can earn money using "other people's money" as you're asking your "dumb" questions and gradually finding the answers.

Takeaway: Just concentrate on marketing first. Don't worry about the other stuff yet. Trying to analyze potential deals without having a purchase option agreement in place is really a total waste of time. You need enough volume (inquiries) coming in order to do business. Like any business, this is a numbers game.. for every X # of responses, you will get a certain % of "takers" and, after that, you may have a certain # of transactions that will not go through for various reasons-- so keep churning, and don't waste your time with 'paralysis of analysis"; when you get a preliminary agreement in place and your funder begins the due diligence (pre-purchase) process, THAT is when you start following more closely-- and for the transactions that ultimately close, you get a nice check AND you're getting a million dollar education for free.

Keep things simple, just keep doing this over and over, and when you've referred at least a handful of notes that close, you've then built up a file and you're going to start to recognize most, if not all of the steps involved so that you can begin to invest in notes for your own account. Sure, there are unique "issues" with any transaction but the funders are going to show you what's good and what's bad and you're learning by osmosis.

One more thing: When you get responses and submit quote requests to funders, be sure to fill out the note submission forms properly and completely. If you're sloppy and/or incomplete with the paperwork, you may not get responses. What I like to do is get out my financial calculator and work the numbers on the note detail I get from the potential seller to ensure that I come up with the same numbers that they have given me. You also need to confirm the EXACT present balance, # of payments made and # of payments remaining... and if this looks like a good note (which you will eventually learn to recognize as you become more experienced), I almost always ask for copies of the note, mortgage and closing statement. Go over them and verify that the numbers line up with the numbers on the submission form.... If the potential seller will not or cannot share these items with you, walk away. They're not serious sellers. You've just screened them out as a waste of time.

"Time is money".