With social and business networks such as Bigger Pockets and Linkedin, is there any economic justification for having a middleman (or woman)? Also is brokering notes legal in the US and even possible for a foreigner (I'm Canadian)? Thanks in advance for your responses.
Is it viable? Sure it's possible, but a compliant buyer network is rarely acquired through social media. Or at least, social media alone. Most valuable brokers are relationship based professionals both with the source and the buyer. Many assist in the the transaction in a multitude ways: like with collateral, recording assignments, giving valid estimations of how much a tape or portfolio is worth, buybacks, etc.
I would imagine it would be difficult being Canadian in this scenario since the licensing to buy,own, and sell assets is pretty strict. Our company had to be vetted, audited, fingerprinted, etc. So I don't want to say it's not possible, but it probably won't be easy.
If you're looking to get into notes and don't have much capital (which I'm presuming), you may have more success JVing with another investor or buying a partial. Plus these two strategies are much easier to accomplish with the help of social media, in my opinion.
@Dave Van Horn Thanks!
@Dave Van Horn Hi Mr Van Horn. I’m confused about the vetting process you mentioned? I’ve only just begun bought one note and I was not asked a thing. I’m signed up on your website (Greg I believe his name was, was very helpful by the way) and it was a simple sign up.
So not understanding the vetting part unless brokering is another animal from just purchasing.
Thank you Sir and I appreciate reading your newsletter and all the help you provide.
Thanks for the kind words.
Brokering in a compliant fashion is a whole other animal than what you're doing .
You're only an individual note buyer, what I was referring to was a brokering note business.
I would say, to Dave's point, most successful referral agents are indeed relationship-based professionals. They source note holders who then become note sellers by working with and obtaining leads from financial professionals who have clients who are holding notes or may create notes in the future. By referring these leads to institutional investors, you can make money by earning a fee which the investor pays you, while putting up all of the cash necessary to close the transaction.
I think this is a great, risk-free way to learn. Walk before you run. Take no risks with your own money while you are still in the learning stages. The worst that can happen is that you make $0 when a potential note transaction doesn't go through for whatever reason or you get a "no quote" from an investor or what have you, and the best thing that can happen is that you earn a fee for the transactions that close.
Money aside, though, the most valuable thing you're gaining is the FREE EDUCATION you're getting by watching the pros either reject or quote on and close a transaction. You're learning what's good, what's bad, etc. simply by watching.
So, after you do a # of these referrals, you will be much better prepared to put up your own money for certain deals after you've learned the ropes a little bit.
I personally think that anyone who 'jumps in' to the note business, never having done a note before, by buying a NPN with his own money to learn by the seat of his pants is crazy. Even if it turns out OK the first time.
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