Here are a few Question & Answers about the note business that will give you an insight into the industry and help you get started:
1. What is the Note Industry?
The Note Industry comprises the purchases, selling, and the brokering of privately held notes by the investors and sellers. It renders good returns to the investors and is quite beneficial for long term investments.
2. Why isn’t there a note buyer office?
The people involved in selling and buying notes, like the note holder and the note broker, work from home, and there is rarely any need for the broker to meet the note holder. Therefore, there is no need for any excess expenditure to establish an office for the same.
3. What can be an example of a cash flow note?
If you ever come across someone who is selling a property and says ‘Owner will finance,’ it means that whoever is selling the property will be the ‘bank,’ and all the payments for the property have to be made to them directly. This is called seller financing, and it is a common way how a private mortgage note is created.
4. How can a note broker find cash flow notes?
The common methods used by note brokers to find good cash flow notes are advertisements, direct mails, letters, social media, referrals, internet marketing, and networking.
5. How can one determine the value of a cash flow note?
In order to determine the fair market value of any cash flow note, you must have information regarding some factors. These factors include an interest rate of the note, the terms, amount of equity, length of payments, and payer’s credits, as these factors will have an impact on the price that the note buyers will be willing to pay.
6. Can all promissory notes be purchased at a discount?
A promissory note most certainly is always sold at a discount. The discount is applied on the note to cover up the note broker’s fees, the note buyer’s returns, and some closing expenses that are involved.
7. What is the amount of money a note broker makes on a deal?
The amount differs for each transaction, but on average, the note broker earns about 3 to 6% of the total amount invested by the note buyer. When dealing with a performing portfolio, the average goes down to about 1 to 2%.
8. What would be the average cost to learn the note business?
Various groups provide training and online lectures on the insights about the note industry and how you can become a pro at investing in notes. But it is important to choose a course that is offered by experts in the industry so that you can make the most out of it. An online course could, on average, cost you about $500.
9. Can anyone start a note broker business?
Yes, starting a note broker business does not require any qualification, and you also do not need to have expertise in the industry. All you need to know is the processes and the people involved, some calculations, and various effective marketing methods to grow your reach and get great deals.
10. What is the final opinion regarding note business?
Just like any other business out there, the note industry also requires persistence and work. Although it is a great way to get more returns, there is no such thing as ‘getting rich overnight.’ However, the note business is a great option for you if you have the earning potential and the flexibility of working.