Building Your Note-Buying Team

If you’re considering making the note business a full-time career, you’ll soon realize it’s definitely not a job you can do alone. Although you’ll make all the critical decisions, you will need a team to bing your dreams to reality.

First on your list should be a mentor. Training is critical and can come in the form of weekend conferences, webinars, books and online courses to mention just a few. But after you have a general idea of how to proceed, it’s nice to have someone who can answer your questions and walk you through your dilemmas. When you encounter a problem, it’s reassuring to have someone in your corner who has years of experience and can offer suggestions on how to work through your current challenges.

At some point you’ll need a real estate attorney to create or review your contracts and help you with foreclosures, if that becomes necessary. It’s good to find a group that can advise you in multiple states since you’ll most likely be sourcing notes across the country and some of these laws vary from state to state.

Like every other business you will need a good accounting firm to help you manage your books and do your taxes. Try to find someone with clients that are real estate pros. Since it’s a small niche, it might be tough to find someone with clients who work in the note space, but it’s a definite bonus if you do.

Although you can find online sources to buy notes from, at some point you’ll want to develop relationships with bankers and hedge fund asset managers. These are the people you can buy from with fewer middle men in the way. It takes time and some finesse to build this network, but your mentor can shorten the learning curve for you and possibly even make the introductions.

It’s very important to hire a servicing company to handle the payments from the borrower. There are Federal laws that mandate how and when to send late letters and how to identify yourself as a debt collector during a phone call. You definitely don’t want to do it yourself as the laws are complex and get updated frequently. In addition, the servicing company will accept the escrow payments for taxes and insurance and pay those in a timely fashion. Finally, some hedge funds won’t even sell you a note if you tell them you’re going to do the servicing yourself. They can get in trouble for not transferring a note to a licensed servicer.

Finally, as your business grows you may want to outsource some of the routine due diligence to someone else. If you can’t find someone locally to handle this, virtual assistants can take this load off your shoulders so you can concentrate on your most important functions which are locating sources of notes and investors to buy them from you.

The best way to find all these team members is through word of mouth. Networking at Real Estate Investing Associations and Real Estate Meetup groups is not only fun, but also a valuable way to make new contacts. Participating at several of these a month will help you get leads to everyone you need to make your note business a success.