I have known note investors who have gotten very excited about making money once they’ve figured out some of the techniques they can use, and they figured that they should work as quickly as possible and accumulate as many notes as they possibly can in the shortest period of time. In many such cases, note portfolio empires built so quickly are like houses of cards which can come crashing down with just the slightest breeze.
There are still a few legends floating around about spectacular deals that frankly, are just no possible. Lots of people waste time and money trying to follow these mythical strategies, so let’s dispel some of them right now.
Myth #1 – The biggest example of this is the “outrageous bargain” myth. Buying notes for “pennies on the dollar” is neither always possible nor probable. There are to be sure, exceptionally good bargains out there if you work to find them but in all honesty they are few and far between.
Myth #2 – You need to have a lot of money. Absolutely not true, a myth perpetrated by bankers and possibly your competition. You can get started in notes with next to nothing (I did) and with persistence and hard work it can be done. The note business is a simple business but not easy.
Myth #3 – Buy and hold for long term passive income is always a good strategy. The real answer is sometimes. Yes, smart note investors buy and hold what they determine to be the good ones for long term. With the rest of them they might improve them so they can sell them at a higher price individually OR build a portfolio of the notes that were improved and resell as a package for even more profit.
Myth #4 – Make sure the note you are investing in and the property securing the note is in perfect condition, and have any title imperfections and property misgivings corrected before funding. In short, this is a very limiting strategy. In fact, some of your best bargains and greatest profits will be made on the ugly flawed notes that nobody else wants.
Take everything you hear with a grain of salt and don’t believe everything you hear until you find out for sure on your own. Figure out your own personal note investor criteria and strategy, determine your own risk tolerances and do your own research and due diligence before buying a note. Remember, success demands action! Keep on marketing, it’s going to work! TWITA! (That’s What I’m Talking About!) ☺
Jeff Armstrong of Armstrong Capital has been a note broker and investor specializing in the seller financed note industry since 1991. He can be reached by email at info@armstrongcapital.com. For more updated and current information on how he can help you with your note business, your note investments or to request a quote on a note you currently have visit www.armstrongcapital.com.