Responding to Negativity

31 Replies

I recently spoke with several friends about investing in defaulted mortgage notes and they had a negative response. They didn't explain why specifically, just that "they'd heard Notes were a bad investment". This doesn't deter us in our note investing journey, but curious how others with more NI experience respond to this kind of objection? 

@Anya Sagee you don't need to respond.  Just change the subject and go with your plan.  Investing in notes is risky and a bad idea if you don't know what you're doing.  Driving a car with proper training isn't a good idea either. It's easy to be negative when you don't understand something. It's not your job to educate them or change their minds.  Good luck and don't give up. 

Anya,

There are many different ways to deal with the negativity. First off, as long as it's not illegal or immortal, or there is no other objection (specifically religious), then for my mind, go ahead.

Part if the negativity comes from the "debt collecting" part of the job, "throwing" folks out of their houses, taking advantage of little old ladies and the like. Sure there are some operations that work like that, but they tend to go out of business. Most NPN folks I know are in this for the business, and it's a numbers based game. It's better to get a NPN performing financially (usually) than to foreclose.

Unless you have been on both ends of the process, you don't have a clue about it. Most folks have only been on the receiving end of the debt calls/foreclosure, but have no idea of how the business works. Your friends are speaking from ignorance, I think.

I wouldn't go so far as to dump your friends (unless it gets untenable), but I would avoid the topic with them, unless they genuinely bring it up to see how it is working for you.

In general, I would talk about NPN as a business, and like any business, you are making a profit (would they like to share in those profits?) by helping two groups of people. They are lenders, and borrowers who have had an unfortunate turn of events in their life. You are looking to help those borrowers rebuild their life. If you get lots of negative feedback, obviously excuse yourself politely.

As always, surround yourself with competent, knowledgeable professionals, (not yes folks), that will push you to be the best businessperson you can be.

As WWII general Joe Stilwell often said "Illegitimi non carborundum". It's a great motto to keep in the back of your mind.

Hope that helps.

Good luck,

Jim

Originally posted by @Anya Sagee :

I recently spoke with several friends about investing in defaulted mortgage notes and they had a negative response. They didn't explain why specifically, just that "they'd heard Notes were a bad investment". This doesn't deter us in our note investing journey, but curious how others with more NI experience respond to this kind of objection? 

 I would just ignore it and find out for myself if what they've "heard" is true. Follow your own path.

My wife was skeptical until we started getting ACH payments every month. People will always be skeptical until you have proof of concept. Just be smart, be careful, and push on.

@Jay Hinrichs may have some good advice for you.  I think he works heavily with notes.

Thanks, @Bob B. !
Appreciate your advice to just change the subject if the convo goes south. There’s definitely a steep learning curve to NI. Thankfully we’ve had great support getting started and there are also generous, caring people in the industry, like yourself, willing to help. Thanks again!

Thanks for the feedback, @Bob Malecki ! You were actually one of the folks who inspired us to get into NI. I saw a webinar you did a while back where you addressed some of the reasons notes made sense for you. It was exactly what me and my husband were looking for but hadn’t yet found in other RE biz models. Thanks for the encouragement!

@Anya Sagee I guess I don’t know why you’re looking to respond at all. If someone told me they were investing in bars of gold to bury in the backyard, I wouldn’t feel a need to respond. I don’t agree which it, if they asked me my opinion it wouldn’t be “positive”, but I’m not sure they’d ask me (or care about) my opinion in the first place. Now if you’re trying to get your friends to put their money into some investment fun to buy notes, that’s a different story. But I’ve never felt a need to try and counter/respond to a random friend that doesn’t embrace out-of-state investing like I do. Then again, I don’t feel a need to gain their “approval” 🤷🏻‍♂️

weigh the risks involved vs other investments. The US economy is steaming hot. There are many ways to invest,  Even invest partial portfolio in gold, bitcoin, stocks makes sense.  Diversification is a sure way reduce the risk. 

You don't need to "prove" anything. Just move forward, be careful, do your due diligence, and get help if you need. My wife keeps on talking about our expenses, but the rent checks just keep coming. My 401K grows every month doing 1st lien mortgages. The proof if in the bank accounts. 

@Anya Sagee Hey Anya, I too have considered it but from a multifamily angle. Frankly, ask those who have actively invested in Note Investing. 

Check out Tyler Sheff from Cash Flow Guys invests in defaulted notes, so he may be able to provide some insights. 

Hope this helps. Goodluck. Thanks! - Ola 

Notes can provide steady strong income without having to deal with tenants, toilets, and evictions.

There are two basic types of notes  performing and npn  then there are different class's of notes owner occ and commercial... each has their advantages and disadvantages  and of course their risk and reward component .

Really depends on what you want to do.

Much like all the talk on BP about turn key rental houses and do it your self... performing notes brokered by your local HML there in the bay area would be more turn key... then you can invest in a fund Like what @Bob Malecki has and that takes a lot of the risk out of it for you and heavy lifting while sharing the profit with those doing the work, or you can try it yourself and do all the work yourself.. each has a level of involvement .. 

regardless of what your friends think in virtually every real estate transactions there is a buyer and a lender as a note investor you taking the lender position..  

In my world my investors prefer to ONLY do performing notes.. return is consistent and more conservative and only in a really bad situation will you have a default.. in NPN your already buying something in default and the job is to get it to perform and end up owning the asset.. for bigger funds or bigger investors this is fine because you will no doubt have a bummer somewhere along the line and you can income average so to speak.. but if by chance your first NPN ends up a bummer then you have a bad taste right out of the gate and this does happen to one off investors. keep in mind by the time a NPN gets to the street so where an individual who cant buy a larger tape gets a whack at them they are pretty picked over and many times have some hair on them

that's my take on it.... @Cara Lonsdale   thanks for the mention.  

"They say misery loves company but so does mediocrity.  Don't let the limiting beliefs of others limit what's possible for you."  -Hal Elrod

Originally posted by @Anya Sagee :

I recently spoke with several friends about investing in defaulted mortgage notes and they had a negative response. They didn't explain why specifically, just that "they'd heard Notes were a bad investment". This doesn't deter us in our note investing journey, but curious how others with more NI experience respond to this kind of objection? 

 Most people don't have an entrepreneurial mindset. Roughly 90% of the population works for 10% of it. Ya see, 9 out of every 10 people think like employees, not business owners. I wouldn't sweat it. No reason they need to be interested & or involved in your business.

@Anya Sagee I don’t know much about note investing but I have a client and that’s all he does. He finds great deals and is profitable doing such...maybe I can connect you two.

Thanks for the response, @James Wise . So true! I find people who are afraid to chase their dreams or take risks often criticize those that do. I guess part of being an entrepreneur is not letting the opinions of others slow you down.  

Thanks, @Maria Fortner --  Yes, please message me. Would be great to connect with your client. 

Thanks, @Mike Dymski - I believe in what we're doing and have good people around me, so we're full steam ahead! 

Appreciate your input, @Jay Hinrichs . Sounds like you have a lot of experience in the NI biz. Great to connect. @Bob Malecki was actually one of the people who inspired us to consider Note investing after we watched a webinar he did, then we read a great book for newbies by @Martin Saenz that sealed the deal. It's been a fun adventure since then! 

Good to hear your recommendations on PN. We're diving into NP 2nds under the guidance of a mentor, but always learning and listing to those with years of experience. Thanks again for the post!

@Anya Sagee   well let us know how you make out on those seconds your buying. 

Thanks, @James C.! I had to look up the Latin, but had a good laugh when I did. ;) We've connected with some great people in the NI biz, and are in it for the right reasons, ie to help people while making a nice profit, so will just let any negativity roll off our backs. Proof is in the pudding, as they say! Thanks again for the feedback and support. 

I am interested in NI, however I don't really know whole lot about it. What do you all recommend me to do to learn more? Or any insight would be a big help @Jay Hinrichs - I have saw your posts on the subject, I would appreciate any guidance you may provide.

I try not to talk about my goals around people who are not on the same road as I am. Only a select group of people even know that I own property. I keep it real close to the chest. I don’t need input from people who have no idea what they’re talking about. Unless these people you talked to have first hand experience investing in notes l, don’t listen to them. Their opinion means literally nothing.

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