What is your technique on acquiring note tapes/pools? (open)

Question

Real estate note investing is a all about relationships with investors, banks, etc. So What I would like to know is what is your way of acquiring these notes? how do you personally contact banks/investors? What are the best routes? Any secret techniques that maybe the average investor just doesn't think of? Im open to all/different advice/tips from anyone who is willing to shed some of their note investing knowledge.

Kevin Moen · Answer

I believe if you go it alone, try to figure out every question to ask, and from scratch try to determine what the full spectrum of due diligence includes, you will lose money.

We are talking about trading securities and being subject to the Fair Lending Act, Dodd Frank, SEC, CFPB, etc. There is a lot to know.

Do you know what a right of redemption is? How about a Point of Sale Inspection? What are your rights and limitations when calling borrowers? What happens if the property is blighted?

These are just a few questions most investors don't even know to ask, let alone how to mitigate those risks. If you think you can mitigate all risks associated with note investing through bigger pockets and figure out on your own what the property due diligence is, you may have a rough experience investing in notes.

Just my two cents, but the great thing is its a free country; do what you feel comfortable with.

Cameron York · Answer

@Kevin Moen Thats really helpful to read and I do look unto FCI Exchange and see how they can be heavily handled. I was wondering how crucial it is to go through a mentor ship program or a Joint Venture. I'm asking because me and my partner feel confident that if we put in the necessary/abundant amount of time, ask the right questions (like here on Bigger pockets), and do the proper due diligence into learning the business before/through acquiring notes; then we can move forward without expensive mentor ships programs and a Joint venture. Am I Right on this? How often do investors go this route?

Kevin Moen · Answer

@Cameron York If you knew the business and had capital you could approach a broker, fund, or asset manager. There are other sites like FCI Exchange as well, but they tend to be the lower end inventory that real investors have already picked through, or over priced for the collateral. I got started through a mentorship program which cost me more than my Engineering Degree, but shaved my learning curve down. I also started attending industry events, trade shows, and networking opportunities to build my buyer and seller list. There is a Note Expo in Fort Worth, TX coming up that I will be attending to continue education, and network expansion.

In the note business there is an incredible amount of knowledge needed to protect yourself from a mistake which can strip your profits, and possibly your capital. That is why I would recommend a joint venture, or hiring a mentor to learn and understand the business.

Cameron York · Answer

@Kevin Moen Thank you for the reply and I see your point as I would ruin my chance of future relationships If I introduce myself with no Capital or knowledge. But if i could pick your brain for a bit, what if I did have the knowledge and the right money figures to obtain thus notes but dont have any notes or portfolio to back me up. What would be the best route to take then on acquiring more cleaner assets? Would it be better to go through joint ventures still? and how did you acquire the tapes/pools when you started investing if you don't mind me asking.

Kevin Moen · Answer

@Cameron York You are absolutely correct, this is a relationship business and finding the inventory is about networking with asset managers, brokers, and fund managers. Attending industry trade shows, marketing on social media/craigslist, etc are all necessary avenues to build a list. However they will vet you, and if you dont have the capital or knowledge, you will be blacklisted.

You can also learn the business by engaging in joint ventures with seasoned note investors, and earn some money while you learn the business.

Kevin

Cameron York · Answer

Yeah I see your point as banks only care with high money involved, but I hear there are ways to get around that if you know the right ways and are willing to do so. But you could most definitely be right and if so then what is your preferred method?