As a note investor you have the power of being the bank. You also have the responsibility of being a bank with integrity to the homeowner who pays you every month. Who doesn’t want to be the bank? Sounds fun and exciting right? Well, as fun and exciting as it sounds, I want to challenge you to set yourself apart! Be the bank with a heart! Somewhere in all of the billions of dollars in profits, banks have lost their commitment to a high level of customer service. Banks have been more concerned with squeezing as much profit out of their customers to meet shareholder demand and bonus structures. Well, as a note investor, that does not have to be you. Here are some examples I’d like you to think about and consider if you are buying notes at fantastic discounts!
Imagine you acquire a note for $25,000 that has a face value of $50,000. Your note has a nice 50% discount. That is a very real possibility, especially in our current market, if you follow some of the techniques we have discussed in this blog. So now what do you do? Or more specifically, what can you do?
You could collect on the note for the life of the contract and make a fantastic return over time. Collecting payments on a note you acquired at a 50% discount, allows you to recoup your investment principle fairly quickly.
You can also help the homeowner get into a conventional mortgage. This will assist the homeowner in lowering, what is most likely a higher than market-rate interest loan. This is a win – win for both you and the homeowner; you get a cash out on your note and the homeowner pays a lower interest rate. Yet, there is still one other option I challenge you to consider…
Contact the person living in the house and ask them this: “If you could pay cash today for the house and how much could you pay?”. It’s a simple open ended question. I am always amazed more people do not ask this question!
What if the homeowner tells you they have $35,000 right now and if they could have waited to pay cash, they would have. Sirens should be going off for you right now! You have the opportunity to offer a huge discount to someone who wants to own a home. Also, you can take a nice profit and move onto the next opportunity that will allow you to make a positive impact on someone else’s life. Imagine, wholesaling a note to the homeowner…. This is a very powerful Win –Win!!
It always amazes me that investors don’t even consider this simple concept. If you are purchasing note correctly you have so many options available to you. It’s most important to keep the lines of communication open between you and your customer, the homeowner. This way you can always identify ways to offer the best customer service because it is truly a win-win senario for you AND your customer! Identifying a discount and/or a great opportunity to pass along to your customers/homeowners is truly creating a deal with a heart. Let’s be profitable while also contributing to the lives of others in a positive way!!
Photo: Nina Matthews Photography