Written by Jeffrey R. Armstrong – President/Owner of Armstrong Capital
Your favorite Master Note Buyer – Straightforward, Honest, Fair…
As a current practitioner and Master Buyer in the Seller Financed Note Business since 1991 I have seen some note brokers come and go and other note brokers come and stay. I often get lots of questions from new individuals in the note business of what to “do” in the business or how to get started. But not many ask me what “not to do” or what mistakes to avoid. After thinking about it for a while I came up with a top ten list of mistakes and things to avoid as a note broker.
Mistake #1 – Thinking that Just Having A Website will Generate Leads – Should you have a website as a Note Professional? Yes, however too many people incorrectly think that by just having a website they will get leads or even deals. Your website can be the main hub of your business if used and promoted properly. There is an ocean of websites out there. What makes you think Note Holders are going to somehow find yours? You need to market your website for people to go to it. Include your web address on every piece of marketing that you do including your business card.
Mistake #2 – Trying to be Everything to Everyone – There are so many different little niches with our note and cash flow industry that it can be overwhelming at times. Whichever niche you choose you must become niche specific, a specialist in your niche and become a recognized authority in your particular area of expertise.
Mistake #3 – Doing What Everyone Else Does – There are certain ways that many of us in the note industry market for notes and negotiate with the note holders. What you should try to do is to do something outside of the norm so you stand out. Try not to blend in with the crowd, differentiate yourself and your business somehow.
Mistake #4 – Not Having a“Call To Action” In Marketing Pieces – This one seems self-explanatory but it must be said. I can’t tell you how many times I have reviewed note brokers marketing materials to find out that their phone number was not in or on their direct mail piece (no wonder they didn’t get any calls) OR their email address was not on their business card! Your marketing materials MUST have a “Call to Action”. For example, “Call today for a $500 bonus!”
Mistake #5 – No Way to Capture Leads – This goes along with having a good website, you must have a way to capture the information from the people that visit your website. Things like an online worksheet submission form, a free e-book if they email you OR even a sign up form for a monthly email newsletter that you might send to them.
Mistake #6 – Not Building Relationships – No matter how much technology improves the way we do business, this business will always be a people business. Building rapport and relationships with the note holders, the investors and other professionals within the note industry will always be a factor in the growth and survival of a note business.
Mistake #7 – Forgetting Past Clients – One of the best referrals sources you can have is that note holder from whom you just closed a transaction with. Do not forget to keep the relationship going to generate more leads and possibly another transaction from the same person in the future! Yet another great reason to have a monthly email newsletter just for note holders
Mistake #8 – Assuming All Investors Are The Same – There is a great deal of misconception out there that every note investor is the same and that is hugely incorrect. With the multitude of notes that come across note brokers desks every month there are countless variations of what kinds of notes note holders have and there are just as many different investors as well. Build relationships with and learn what each individual investor is looking for. Learn their risk tolerances, demography preferences, property type preferences and appetite and you will see a difference in the number of transactions you are closing every year.
Mistake #9 – Assuming the Highest Price is the Best Price – Every note situation that you are presented with is different and the puzzle of the business is for you to figure out how to fit the puzzle pieces together. Yes, price is important, but so is the need of the note holder, the speed of closing, partial purchases vs full purchases and ease of working with the investor (among other things). Too many note brokers only give full purchase options and never get into finding the true need or want of the note holders. Often they will take less or a different option if the transaction will go smoothly and quickly versus slowly with lots of hassle.
Mistake #10 – Thinking Yield is the Only Way Note Prices are Given – When an investor buys a note ONE thing that they look at is their own personal yield preferences. However, that is not the only thing that is taken into consideration when giving price options on a note. Other considerations include: credit of the payor, type of property, location, demography, cents on the dollar, investment to value and minimum discount just to name a few. Keep in mind that every note is different and will be priced according to its attributes.
I hope this little list of things to avoid will be helpful. There is much more to this business than just subtracting your fee and collecting the payments. Keep alert for learning opportunities, stay connected with current practitioners and never stop growing your business. Remember, success demands action! Keep on marketing, it’s going to work! TWITA! (That’s What I’m Talking About!) J