Does Bigger Pockets provide FULL information about notes?
Bessemer, AL · Member since 2014 · 581 posts · 32 votes
Does Bigger Pockets provide FULL information about notes?
Most Popular Reply
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
7y@Tony Marcelle
What do you consider a life savings? Most of the information can be found online through YouTube, BP, podcasts and several books. There are training courses out there that consolidate this training for a fee.
Note investing is more complex than traditional real estate investing due to more regulations and potential legal issues.
I recommending reading up and joining some local and online groups to learn more. Figure out what you want to invest in then find someone who will either mentor or take a training course.
This business also is not a business you can learn overnight and go start investing. It takes time and you will want to make sure you setup your business the correct way. Before doing this I would recommend also making sure this is what you want to do as to be a note investor is not passive and takes time, $ and an investment in proper systems. If you are only going to buy a few notes per year you are better to team up with a more experienced investor and let them manage the note with you to limit your overhead costs
7e investments53 Reviews
26 Replies
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes7y
@Tony Marcelle
What do you consider a life savings? Most of the information can be found online through YouTube, BP, podcasts and several books. There are training courses out there that consolidate this training for a fee.
Note investing is more complex than traditional real estate investing due to more regulations and potential legal issues.
I recommending reading up and joining some local and online groups to learn more. Figure out what you want to invest in then find someone who will either mentor or take a training course.
This business also is not a business you can learn overnight and go start investing. It takes time and you will want to make sure you setup your business the correct way. Before doing this I would recommend also making sure this is what you want to do as to be a note investor is not passive and takes time, $ and an investment in proper systems. If you are only going to buy a few notes per year you are better to team up with a more experienced investor and let them manage the note with you to limit your overhead costs
7e investments53 Reviews - 7yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
@Chris Seveney, VERY well said....
- Bessemer, AL · Member since 2014 · 581 posts · 32 votes7y
@Chris Seveney For me, life savings would be anything over $10,000. Even $4k is too much for me to spend on a course. I do not want any information about note investing. I want full details from start to finish about buying notes. One in particular I am more concerned with is getting the funding to buy notes. I was listening to some note investors on YouTube. The one thing I noticed investors flat out did not want to address was WHERE are people supposed to get the money to buy the notes if they do not have money out of their pocket to purchase notes. Knowing how and where to get the money to buy the notes is the most important to me. No course, webinar, book, or anything else is going to do me any good if I do not know where I am going to get the funds to purchase the notes. I am interested in learning all I can about buying notes even if it is not overnight. I am interested in buying bulk of NPN direct from the banks.
- 7yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
@Tony Marcelle, my GOD! Your post is FULL of contradictory statements, as well as all over the place. If you don't have money to invest, or don't have the capacity to borrow the money, then you're wasting your time. Accumulation of capital is NOT something that occurs immediately because someone discloses a "secret". It take time and begins with SAVINGS. Further, without developing a track record of success, you won't be able to borrow or get any investors to invest their hard earned money with a novice.
Further, I detect an underlying attitude of arrogance and entitlement in the language you use in your posts. Please understand that those who choose to help you with their expertise and experience are not be compensated; we answer questions and provide advice because we enjoy helping those who want to be as successful as us and who appreciate the help. I for one will no longer respond to any of your posts.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes7y
@Tony Marcelle
Would you give someone who had never flipped a house before $10,000 to invest in a flip?
Most would say no and same goes with notes. Not trying to be hard on you but want you to understand realities and not waste money.
Prior to learning how to raise money you need to learn how to manage notes. There are ways to raise $ (legally which you should be aware of) but it is extremely difficult if you do not have proper experience.
You can see by some recent posts here in this subtopic about what can happen when assets are not properly managed.
7e investments53 Reviews - Bessemer, AL · Member since 2014 · 581 posts · 32 votes7y
@Don Konipol I am not trying to be arrogant or entitled in my language. I am not trying to be rude when I say what I said. I am not talking about people like you and Chris or any other members on Bigger Pockets. I am referring to other investors outside the BP community who do not know all the ins and outs to investing in notes. I am just saying I do not want any old information provided from other investors out there who are not going to explain in more detail how to invest in notes. Small bits of information explained about note investing is not going to be much help without knowing all of it. I do not have the money of my own but having access to funds is what I am interested in. I am willing to learn what I need about note investing until I get to the point I can go out there and connect with those who do have the funds and would be willing to work together based on all that I have learned about this type of business.
- Bessemer, AL · Member since 2014 · 581 posts · 32 votes7y
@Chris Seveney I see your point. I am willing to learn the business as much as I can as long as I need to before diving head first. That is all I am saying. I appreciate the advice you and Don are providing.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
to answer your question directly. unless you have credentials in the financial industry your ability to raise outside capital to buy notes will be impossible.
note investing is cash and carry.. nothing in between.. and its a business its not a passive investment pursuit.
- Bessemer, AL · Member since 2014 · 581 posts · 32 votes7y
@Jay Hinrichs What are your thoughts on other note investors with years experience who say buying notes is better than buying property? Everyone is saying how complicated this business is. Someone who is doing this and successfully had to start from scratch somehow someway whatever that may be.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @Tony Marcelle:
@Jay Hinrichs What are your thoughts on other note investors with years experience who say buying notes is better than buying property? Everyone is saying how complicated this business is. Someone who is doing this and successfully had to start from scratch somehow someway whatever that may be.
its a great play for those with money in an IRA and cash.. its simply not a model that can be done without cash to buy the notes you don't leverage into buying debt. Unless your a bank or like I said very versed and experienced money manager
- Bessemer, AL · Member since 2014 · 581 posts · 32 votes7y
@Jay Hinrichs Can lines of credit be used to buy notes or partner up with other real estate investors who do have cash? From what I hear about notes is that banks have a lot reasons for wanting to get rid of non performing notes at a big discount and that buying notes is a better way to purchase the property itself and that it allows more control and flexibility.
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes7y
@Tony Marcelle
I would say the info is old news
1. Banks are no longer selling at big discounts because they do not have too. A decade ago they were forced to liquidate as a non performing asset caused them to have to put money in reserves (check out fractional reserve lending if you want to blow your mind).
2. Most note investors do not want the property / it is better socially and financially to keep the borrower in the home.
To start in notes I would suggest a min. Of $50k is needed and that would get you some high risk assets but you could get multiple of them.
7e investments53 Reviews - Member since 2018 · 110 posts · 109 votes7y
Originally posted by @Tony Marcelle:
I see other note investors are asking for life savings to pay for their courses on how to buy mortgage notes. I was wondering if Bigger Pockets might have books, courses, webinars, podcasts, or something that explains from A-Z how to purchase and profit from buying notes from the bank.
Note investing isn't talked about as much because it requires funds to get started, more funds than a typical single family home with 20% down.
I have spent hours upon hours learning everything there is about note investing, chatted with a couple of note investors, and and read a book.
When you try to get into note investing without any money it's a battle that most people will fail at. Why? If you get outside money and not much of it, and you buy notes that lose you money or don't get any good return, then you have no capital to work with.
It takes money to make it big in note investing and you have to know how to sell/market yourself to the folks you want to buy from. The large banks will sell notes to hedge funds for millions (they get them cheap) and they will sell single notes or bundles. Eventually those notes get to the regular note investor and you can buy and sell among eachother and you could even do a partial.
You can buy notes from credit unions and small regional banks, but it's not likely they will waste their time if all you have is $20K to buy one note. If you can get into a mortage lender with $500k in CASH they may take a meeting from you to talk about what you can buy from them.
There are always people who try note investing and quite right away since they lack the capital. This is an investment option that requires cash to make it. This isn't an investment where you can put 20% down and get the rest in a loan and make $200 per month in cash flow from renting out the home. Note investing is an investment that could cost $40k to buy a single note or a few notes and there will be some non-performing notes that never become performing and if you bought the note from a judicial state it may take 2 years to get the property foreclosed on.
You can get sued. You can easily lose all of your money. You could also make it big if you start with enough cash to buy enough notes to hedge against the ones that will fail to produce.
If you want to buy performing notes you will have to spend more as they cost more than a non-performing.
I'm doing note investing for vehicles, student loans, and mortgages (mobile home parks, apartments, homes). You could even buy notes from companies that lend to McDonald's, Culvers, etc for their real estate properties. You can buy notes that are for student housing, university buildings, and much more.
- Bessemer, AL · Member since 2014 · 581 posts · 32 votes7y
@Jonathon Weber Is it still just as expensive to buy notes for vehicles, student loans, and mortgages (mobile home parks, apartments, homes) including notes from companies that lend to McDonald's, Culvers, etc for their real estate properties? How did you get involved with the notes you are investing in now? How is that working out for you?
- Member since 2018 · 110 posts · 109 votes7y
Originally posted by @Tony Marcelle:
@Jonathon Weber Is it still just as expensive to buy notes for vehicles, student loans, and mortgages (mobile home parks, apartments, homes) including notes from companies that lend to McDonald's, Culvers, etc for their real estate properties? How did you get involved with the notes you are investing in now? How is that working out for you?
I'm just getting started. I've always wanted to invest but wanted to build my skills and income up to the 1% level before I started to invest. I'm on pace to hit the bottom of the 1% income earners this year. I plan on keeping that income and then go out and help people keep their vehicles, keep their homes, and get their student loans paid. The student loans are required to be paid and they will not be thrown out in a bankruptcy filing. It's a major problem for young people and I want to help. For homeowners, they are just trying to keep a roof over their head and things happen in life and you can fall behind in payments. I want to help them get their foot back on track and even do a loan modification to help them.
I deal with people on a daily basis so note investing is just an extension of the skills I already developed and talking to people on a daily basis.
Note buying for vehicles have different laws to follow and they are cheaper to buy. I already have a plan of action in place where I would sell vehicles with a local used car dealership for the vehicles I end up having to take. Dealerships want inventory in and out monthly and they are willing to sell the notes to help the movement of inventory.
- Bessemer, AL · Member since 2014 · 581 posts · 32 votes7y
@Jonathon Weber I wish I could get my student loans paid and done with. I am stuck with that for a lifetime at the pace I am at now. You seem to be taking a different path than most investors who are buying notes for the profit.
- Member since 2018 · 110 posts · 109 votes7y
Originally posted by @Tony Marcelle:
@Jonathon Weber I wish I could get my student loans paid and done with. I am stuck with that for a lifetime at the pace I am at now. You seem to be taking a different path than most investors who are buying notes for the profit.
People get into notes for various reasons. I'm someone that can easily relate to others and build the trust.
My goal in doing this is to help people.
You will not be seeing me doing partials, or selling off the junk to screw others over, or taking outside money to fund this. I'm funding all of this with my own hard work.
- Bessemer, AL · Member since 2014 · 581 posts · 32 votes7y
@Jonathon Weber Not bad.
- Real Estate Investor · Amherst, VA · Member since 2015 · 386 posts · 400 votes7y
Right now, I don't advise anyone to get into notes. At least not the way we did 5 years ago. Some people are successful at it but it's more trouble than it's worth because of the scarcity of inventory and large amount of small investors looking for the same thing.
At the moment there is a much lower barrier to entry in creating your own notes by funding other people's real estate projects (ie private lending). Easier, quicker, less headache and still decent returns.
- Member since 2018 · 110 posts · 109 votes7y
Originally posted by @Patrick Desjardins:
Right now, I don't advise anyone to get into notes. At least not the way we did 5 years ago. Some people are successful at it but it's more trouble than it's worth because of the scarcity of inventory and large amount of small investors looking for the same thing.
At the moment there is a much lower barrier to entry in creating your own notes by funding other people's real estate projects (ie private lending). Easier, quicker, less headache and still decent returns.
Private lending is a very appealing option for those that have cash. For example, I know of a company in Florida where you can fund the entire development for a low income house that costs $125k to build and they split the sales profit 50/50 with the investor. Typically they sell for $175k. Only problem with that is it becomes a short money gain and not something you can capture for 20 years.
Private lending for a large apartment complex would be the gold standard achievement, IMO. The highest potential returns and possibly could last more than a decade before they sell.
- Lender · Sioux Falls, SD · Member since 2016 · 26 posts · 20 votes7y
Another possibility not yet mentioned here are note hypothecations. I am of retirement age, looking to grow my self-directed IRAs as passively and risk-free as possible. Hypothecations are working for me. I buy partial notes from note owners. They get a lump sum of cash to reinvest, while maintaining control of the note. In return, I get monthly payments at a higher rate of interest than usual, tax free because of using my self-directed ROTH IRAs. I need cash flow later in life, and this will provide it if I keep rolling the money over into more notes, creating monthly payments for a longer length of time. Due diligence is a bit different with hypothecations. The note owner has already done due diligence on the security and it’s passed their requirements. My due diligence is done more on the note owner. How long have they been in business? What are they posting on Bigger Pockets and other forums? Are they trustworthy and honest? What is their level of expertise? What has made that note “safe” for them? In other words, what is their plan in case of default, for the borrower as well as for me? If they meet my standards, I reach out to see if they’re willing to do hypothecations. If so, and many of them are, then we structure a hypothecations deal that is a win/win for both of us. This model has worked very well so far for me. Could I make more money being the owner of the note myself? Yes, absolutely. But at my age, I’m ready to slow down. I’m still earning double-digit interest on my money. It’s good enough for me.
If you don’t have a lot of cash to invest, you can partner with friends and family using cash and/or self-directed IRAs. Build your accounts by rolling the money over and over, learn the business while doing so, and eventually you’ll be able to step into a more active roll, if that is your goal, as your time and funds allow.
- 7ySteve HodgdonPro MemberInvestor · Novato, CA · Member since 2015 · 432 posts · 321 votes
@Tony Marcelle It's a get rich slow, get hurt fast kind of business. I didn't take anybody's money for 3 years to make sure i knew what I was doing. AND I had 30+ years experience buying/collecting debt as a collection agency operator. And I've run a property management business.
There's plenty of free info out there, some decent books. I like the BP library. Don't pay for masterminds or long term coaching. Most people wash out because it's not easy and the sharks find them.
- Minneapolis, MN · Member since 2016 · 60 posts · 18 votes7y
@TonyMarcelle, if you're looking for the pathway to making it in notes, concentrate on brokering *performing* notes. NPNs are an advanced strategy; the same goes for traditional RE investment strategies. Most people start out with residential, and occasionally will look into commercial. The safest way to get into the business is to "earn while you learn". By brokering, you get to build up the capital necessary to put up your own money (skin in the game). Gaining the knowledge by learning from the "experienced players" is your best bet to make it, legally and ethically.
- Specialist · Frederick, MD · Member since 2017 · 474 posts · 454 votes7y
@Tony Marcelle - There are experienced note investors who look for "funding partners" to join them in a Joint Venture where they provide access to assets and expertise in exchange for a share of the profits - usually around 50%. In my opinion, it's a way to invest passively in notes, but not the best way to get your hand dirty and learn about them. I know some may disagree. Personally I'm a learn by immersion and by doing person.
Below is from a post I made just last month replying to someone much like yourself:
Not knowing your goals, experience, potential focus in the note space, or personality - I'm going to wing this and see how it goes:
1. Listen to the entire "Note Inc." podcast. It's laid out like an introductory course on notes. Entertaining and worth the time. (Free)
2. Search the "The Note Queen" on YouTube. I really like Dawn Rickabaugh's take on "Property and Paper." On YouTube you'll find her recorded webinars. You can also sign up to participate live where she'll help you to drill down on deals if you ask her to. (Free)
3. Join Facebook groups on notes. Some who run the groups also host podcasts which are educational. (Free - except for allowing FB to know everything there is to know about you)
4. Read any or possibly all of these books: Invest in Debt (Jimmy Napier), Real Estate Note Investing (@Dave Van Horn ), Note Investing Made Easier (@Martin Saenz ), Bulletproof Title Due Diligence (Alex Goldovsky). Mr. Van Horn and Mr. Saenz are accessible through this forum.
5. Consider purchasing a performing (preferably not re-performing for your first note) note from someone reputable for your first deal. Mine was from a flipper/turnkey operator on a house in Memphis. An almost brand spanking new note created by someone I know and trust who I know would most likely buy it back from me if it ever goes south. It won't and I'm still collecting payments on it today. I recommend this so you get used to buying "paper" and everything that goes with it.
6. Listen to the Good Deeds Note Investing Podcast. @Chris Seveney co-hosts this one with @Gail Greenberg. It's like tales from the non-performing notes front lines. I love it and pick up great stuff all the time.
7. Lastly, I have positive first-hand experience with a couple of other paid educational resources: "Note Investing Academy" and "Note Investing Tools." Of course, you could consider joining one of these sooner rather than later, but I gave you some free stuff to wet your whistle first... and it's good stuff at that.
Hope this helps. I love to learn and especially have enjoyed learning about notes. Go get 'em...
Join the conversationCreate a free account to reply, vote on answers and follow this thread.