Note Investing - What's Your Biggest Fear

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Note Investing - What's Your Biggest Fear

Chris SeveneyBusiness Member
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Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

Typically I hear from other investors about their biggest fears in Note Investing. Do you have one? The most frequent I hear are:

1. You are investing out of state

2. You cannot see the inside of the property

3. A borrower will find you and come after you

4. You may have to foreclose and kick someone out of their house

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Chad U.:
Originally posted by @Chris Seveney:

Typically I hear from other investors about their biggest fears in Note Investing. Do you have one? The most frequent I hear are:

1. You are investing out of state

2. You cannot see the inside of the property

3. A borrower will find you and come after you

4. You may have to foreclose and kick someone out of their house

That the city will condemn the property due to its unsanitary condition that the borrower was living in, and won't release it back to you as the rightful owner until you jump through a million hoops and needlessly spend an exorbitant amount of money on their "city approved" contractors.  Even though you have foreclosed on the borrower and had them evicted.  

or you drive down the street come to your address and its a vacant lot.. city has already demo'd it..  been there done that a few times.. you just have to do a big belly laugh when that one happens

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  • Ken Hobbick
    Investor · Parker, CO · Member since 2014 · 42 posts · 44 votes
    7y

    @Sarah Dawson,  I can relate about concerns for finding inventory on what can be considered a viable note.  Being analytical in nature I have to fight against the analysis paralysis when looking at non-performing loans because its easy to find things wrong with them,  but that's why they will sell at a discount.  I would think you could find seller financed performing loans with lower risk with the right contacts. 

    Currently my biggest fear is losing capital due to dishonest seller, issues with collateral file causing inability to collect on loan,..etc.    which can be mitigated by proper due diligence but sometimes you can't know everything

    I second @Bob Malecki recommendation to attend conferences and networking,    I am planning on attending Papersource next month as well

    1Reply
  • Bill McCafferty
    Real Estate Investor · Coatesville, PA 19320 · Member since 2011 · 108 posts · 178 votes
    7y

    My biggest fear?

    Since I do this full time and it's my main source of Capital to support my Family (Wife & 2 Kids). I always fear that I can't continue to do that. Which is what puts the fire in me, I don't ever want that to happen. I love this business and need this business.

    After numerous monster years, I fear not being able to that year after year. The fear motivates me to never let that happen. It comes down to me, making it happen.

    I need to stay focused and put the time in daily. Keep pushing forward, no matter what happens.

    I never fear losing money or lack of product. I've made lots of money and lost a lot, it's a roller coaster ride. The Product will always be out there, it's definitely harder today, than it was after the 2007 crash. Build relationships and networks.

    1Reply
  • Jamie Bateman
    Investor · Baltimore County, MD · Member since 2014 · 466 posts · 439 votes
    7y

    I'd have to say my biggest fear at this point is losing a JV partner's money. Obviously I don't want to lose my own funds but I am in this for the long run and my reputation (based on integrity, experience, network, etc.) is more important than the money itself.

    Like others (@Bob Malecki, @Chris Seveney, etc.) have already stated, much of this fear can be mitigated by taking action through investing in my note education, conducting proper due diligence, and growing my network. 

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  • Derek Scott
    Columbia, SC · Member since 2018 · 16 posts · 14 votes
    7y

    Getting into the Note business and the "bubble" bursting.  Saw my parents in FL get burned bad in 2007 and I need a homerun investment (or atleast a few singles) to get the wife fully onboard.

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  • Chris SeveneyBusiness Member
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    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    7y

    @Derek Scott

    I would stay away from attempting home runs. As in baseball, when trying to hit a home run you strike out more often that get a hit. Starting out I strongly recommend buying a performing note so you understand the process and players. Once you get familiarized with the routine tasks then start to take on more

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  • Derek Scott
    Columbia, SC · Member since 2018 · 16 posts · 14 votes
    7y

    @Chris Seveney Thanks for the suggestion.  I've listened to most of yours and Gail's podcasts, by the way.  Please keep them coming.

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