Written by Jeffrey R. Armstrong – President/Owner of Armstrong Capital
Your favorite Master Note Buyer – Straightforward, Honest, Fair…
The Note Business will continue to survive as evidenced by all of the hurdles and surprises that we have had to overcome in the past several years. As the year comes to a close it is a great time to reflect on why we are thankful for the Note Business. Since 1991 the Note Business has provided me with a way to support my family, use my creativity, explore my passions and give back to those who have given to me. As I reflect over the last year several things come to mind that I am thankful for in the Note Business.
Perhaps the most exciting thing to be thankful for right now is the unbelievably low mortgage rates. I know I often preach that “it’s not about the rate” and that if something seems too good to be true, it often is. But there’s no denying that rates are still historically low. With such low rates, yield requirements for notes from Institutional Note Investors have never been lower. Regardless of the type of security instrument – mortgage, deed of Trust, land contract – or whether the seller financed note is a 15- or 30-year, fixed rate, interest only, adjustable or with a balloon – you can get a fantastic yield for a AAA seller financed note these days. Just a couple of years ago, if someone had said note investor yields would drop to the sevens or eights, note professionals would have laughed. Not so today. Of course, this is excellent news for today’s Note Holders who have great terms and good solid performing notes. After all, what note holder doesn’t want the most they can get for their note?
Remember the early and mid 2000s, when some note holders expected note buyers to get into a bidding war for their note? Some note buyers got sucked into it and made some hasty decisions, overbid, and pounced on a note the minute it became available. Inventory was tight, prices were over-inflated, and note brokers were going so far as to write pleading and even heart-warming letters to potential note holders for the mere privilege of paying them a lot of money for their note. Those days are gone for now.
I am thankful that today’s note buyer can take their time (without slowing the process down). They can look at a note, investigate a neighborhood, and make an informed decision. Seller held note inventory is higher now than in recent memory. Good quality notes still go fairly quickly. What’s different – and better – now is that there are no longer the insanely stressful bidding wars we may have seen in years past.
In 2005, I had a note holder accept an offer on their note in March, only to be told that the note seller didn’t want to close until September. While the note buyers were not thrilled with that far away closing date, they felt they had no choice. When the note due diligence revealed page upon page of issues, the note buyers chose the most important two or three and didn’t worry about the rest. In simple terms – the note sellers had all the power. Some Note Buyers had to be thankful for the scraps they were tossed.
I am thankful that today, note sellers are being more realistic throughout the note buying process as far as closing dates, what they are willing to compromise on, etc. Some note sellers will even throw in a few of their own dollars (towards normal closing costs) to get a note transaction to close. At this point notes are still, as they have always been, a great investment (as far as safety and security) IFF they are purchased correctly.
In America small business owners like to complain about overregulation, taxes, licensing and other hurdles and those are all very real issues. But compared to most other countries, the good old USA still represents a unique combination of freedom; relatively low taxes and non-intrusive regulations; a skilled, diverse workforce; an entrepreneurial culture with unlimited opportunities; rich and varied sources of capital; and a transparent and consistent business culture maintained by rule of law, not connections, bribery, and influence. And I am thankful for all of that. Really, where else would you want to run your small business?
I am thankful that small is the new large. Revolutionary changes in technology — including the increasing consumerization of business tech, the rise of cloud computing, and many other technological advances are dramatically cutting the cost of equipping a Note Business and building a computing infrastructure. Best of all, these trends seem tailor-made for the needs of small businesses — especially the Note Business — not saddled with the legacy systems that can hinder many older, larger companies.
I am thankful for the internet and social media – from Facebook to Twitter to Linked-In to email marketing, the internet’s impact on the note business is impossible to overstate. The internet has made it possible for even the smallest one person note businesses to sell their services around the nation, to work with note holders in remote locations, and to inexpensively market to millions of people at once. On the web nobody knows you’re a small business — in many ways you’re competing on a level playing field with the larger companies. And that’s not all. The web also makes it easy to get the information you need to make your note business successful — not to mention network with your peers for advice and support.
Lastly, something I’ve been thankful for since I started my Note Business and am still extremely thankful for is that in the Note Business you are your own boss! The best part of running a note brokering and note buying business has always been that you’re in business for yourself, not someone else. So go ahead, take Friday off — the boss won’t mind. Remember, success demands action! Keep on marketing (and building that referral business), it’s going to work! TWITA! (That’s What I’m Talking About!) J