A day in the life of a note investor

6 Replies

Greetings, forum. I'm peeking over the fence to see what all the fuss is about. One aspect I'm reading about is how notes are hard work, entail lots of phone calls, and feels like an being an administrative assistant, but it's unclear in what perspective that's painted. Are you talking tedium hard, or "Sell, Mortimer! Sell!" precarious hard, or calculus hard, or no life outside notes hard, or ...?

Books, tapes and seminars won't cover the actual day to day lifestyle, so I thought I'd ask for your experience as part of the whole picture. 

Thank you.

My opinion is that it is all up to you and how involved you want to be. When we were in commercial apartments, we learned to manage the managers. I don't deal with borrowers, I deal with loss mitigation firms, servicers, attorneys and property managers. And I don't call them every day. They know what their job is, so I check in on the status every once in a while. Sometimes I only check in once a month. That gives me time for the hot issues that do come up now and then.

The opposite side of that spectrum are investors that treat their vendors like employees and they are calling every day. That will keep you busy and it won't earn you many gold stars from the vendors either. In fact, if you turn out to be a burden, they'll fire you.

We've got over 60 active notes. And when I say we, the wife is the other part of that pronoun, but I do all the work. I don't put in a full 40 hour week. But I'm also very organized with my systems and I'm a manager of managers.

@Geoffrey Pierce
I second what @Adam Adams noted.

Also there are many perspectives on this. If you think you can take a weekend training and be a note investor - not the case. It’s like any other profession, it takes time to learn, network and understand the proper balance of managing the workload.

Your background and experience will also dictate your perspective. Like adam mentioned coming from commercial real estate or other backgrounds notes may seem like a cup of tea since many in those backgrounds have dealt with real estate professionals and know what IRR is and how to run a financial model. Then you could be a doctor or lawyer and 10x smarter than I am (which is not hard to do) but struggle with notes at first because you do not have a long history of this type of work.

For me, the people I see as being the ones who are successful in notes are those who are well organized, good managers of people and do not let pressure get to them. You can learn how to model costs, it’s much more difficult to learn how to act under pressure and manage people.

I would second what @Adam Adams said. There is certainly more work to do when buying non-performing notes when compared to performers. But the risk/reward is also greater. We have over 300 notes in our portfolio and without the vendors, systems and processes that Adam referred to we would never be able to manage them. I actually put together a video early last year about that. PM me if you want the link.

@Adam Adams , @Chris Seveney , @Wayne Snell Thank you all. I'm getting the picture and definitely cognizant of the inadequacy of seminarland.

Can you describe the pressure events and timeline? Are you talking risk tolerance pressure, plate spinning pressure or clock's ticking we need an answer pressure?

Thank you @Geoffrey Pierce for starting this. Definitely quality answers from reputable people, but the one thing that wasn’t mentioned and I think is crucial with regard to aspect of time, is sourcing assets.

This to me, who is much less experienced by far than all that have replied, is where the absorption of time comes in. It’s common knowledge that pricing has moved upward (and from what I read here, investor expectations don’t seem to be on par with that but that’s another story). Thus I’m wondering if we could get some feedback on that aspect as well?

I hope this is not a “hijacking” of your post but more of an elaboration.

Thank you,

Robert

I think you can see by the responses the NPN and note business is the new guru target how to ..

those in the business as you can see are in the business.. and have substantial investments in the notes and a lot of volume..

I think NPN you have to to make sense of it.

other wise great performing notes since you have cash flow day one is a better bet for a beginner and you align with a great broker who just feeds you the deals.. much much easier and safer.

then once you get the hang of it if you want to try the NPN and if you can find one that makes sense.

other wise I think its a business and a job basically and needs to be scaled..

I just wonder when I see these folks who have no training no real background in notes decide they are going to jump into NPN on their own... having taken or course or not..

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