As with any new venture or form of investing, it’s important to gain knowledge of what’s involved, so as to increase the likelihood of success. Well, note investing is really no different, and getting educated in this area is definitely not something you want to skip.
Remember, as I stated in previous articles, that if you want to be successful in something, you’ll need to get educated in the space, start to network with others doing the business, and if you really want to accelerate things, you should find a mentor or coach in the business.
Education is a big part of it. Although I discussed some resources in my recent article, “How to Get Started in Real Estate Notes: A Primer for Investor Newbies,” I’d like to expand on the sources of education that are available for learning the notes business.
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5 Sources of Note Education
There are many books on the topic of note investing, but to know which ones to pick up, you may want to first decide what types of notes you’re thinking about investing in.
For me, one of the best books I read when starting out was Invest in Debt by Jimmy Napier, but this was geared more to the seller-financed note business. I started out doing seller financed second mortgage notes when selling a property and private money notes (very similar to a hard money lender), which are really short-term, first mortgage rehab loans.
The Banker’s Code by George Antone is broadened to wealth building strategies and being the bank, but it’s definitely a good read when you’re just starting to learn about note investing.
If you’re looking for something specific, such as information on mobile home notes, then you could check out Deals on Wheels by Lonnie Scruggs.
It’s important to get to know what your flavor is, such as first mortgages, second mortgages, commercial mortgages, private mortgages, distressed banknotes, etc., just to name a few.
Then there are blogs, and of course one of the best is BiggerPockets. There are plenty of note articles, and there is also a Tax Liens, Notes, Paper, & Cash Flows discussion forum that you can subscribe to or use to ask note related questions.
There are also industry blogs, which are geared towards news and updates that impact the mortgage industry. A few examples are DS Mortgage News, National Mortgage News, Mortgage News Daily, or even HousingWire.
3. Podcasts and Webinars
BiggerPockets has a podcast on notes, as do some other venues, such as Brecht Palombo’s DistressedPro.com.
Besides some low or no-cost interviews and webinars that note experts in the business put on, many self-directed IRA companies (CamaPlan, QuestIRA, Equity Trust, etc.) also provide free webinars on note investing. And another perk is that they’re not selling you anything.
Keep in mind, some webinars may be a ploy to get you to go on to the next level with the speaker or promoter of the podcast or webinar, but a great way to screen that is to ask others on BiggerPockets for their opinions and past experience with the various speakers.
4. Mentors and Events
Finding a mentor and attending events may be a little more challenging, depending on the amount of time and money you have to invest in your note education.
To be quite honest, at most of the note events I’ve been to, I’ve met a lot of great people and learned a lot too, even if there was some guru selling going on. Usually, the events really weren’t super expensive either.
As with anything where common sense will have to prevail, there are good mentors and there are bad; sometimes you get what you pay for and sometimes you don’t. The best advice is to do your homework and research the person or programs.
For me, networking with other note investors has been the most helpful. As for new groups, these are usually online or in person.
For example, I run a Distressed Second Mortgages Group on LinkedIn (DSMG). In my area, you can join Philadelphia Note Investor Group (PING), where you can physically go to a meeting and network with like-minded individuals.
There are many note groups out there, many of which are organized through either Facebook, LinkedIn, or Meetup.
No note group near you? Do like Andrew McDaniels did with the National Note Buyers and Sellers group on Facebook, and start your own.
There are also national conferences focused on notes, such as PaperSource and Noteworthy. Then, there are conferences more specifically in reference to institutional notes and mortgage servicing, such as Five Star and Mortgage Bankers Association.
ACA International also holds Conferences & Expos, which cover compliance and other topics related to debt collections.
Now, finding a mentor can be a little tougher. There are mentors you can pay — after all, they’re giving up their time and it may be well worth it, or there’s no-cost or low-cost mentors. Maybe it’s someone who doesn’t sell coaching, but they happen to have a lot of experience in the business.
Hopefully you can bring something to the table to help them. Really, it needs to be a two-way street in this type of give-and-take situation in order for it to be fair. What can you do to help your mentor out? It doesn’t really matter what it is, but it should be a fair exchange.
5. Taking Action
When teaching about delinquent second mortgages over the years, we used to have a saying that our students were afraid of the “F” word — Foreclosure. Oftentimes, they were afraid of the unknown future outcome and expense of their note deal (especially since deal outcomes are more statistical with second mortgages), and they were often reluctant to move forward in the collections process.
Well, this is very similar to someone who’s learning about note investing for the first time, except that for them, the “F” word is really Fear, which can be a roadblock preventing them from taking future action.
Getting educated in the note space is important, but I also believe that it is a “learn by doing business.”
At some point, the student needs to pull the trigger and get into a note deal. Keep in mind, there are safer ways to do this when starting out, such as purchasing first liens or deals with a lot of equity.
If you’ve done your due diligence and your homework, maybe it’s time to move on.
After all, the best education I’ve gotten has usually cost me some money.
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