You are the note broker around whom this drama revolves.
Your name is Ned NoteBroker (or Nancy NoteBroker).
You used to be a real estate investor but you got tired of dealing with rental properties, tenants and the constant maintenance. You took several courses on discounted notes. You read several books on cash flows, are a whiz with the financial calculator, and have some very powerful marketing brochures and a dynamite marketing plan. You have developed several contracts to use when dealing with both buyers and sellers of notes. You are proficient on the financial calculator. You can think of at least 15 ways to buy any note that is presented to you. You are an excellent negotiator, and have developed the skill of listening to the people who either want to buy a note from you or sell a note to you. With your listening skills and calculator skills you can usually give your customers exactly what they want for their notes.
You have also developed a source of institutional buyers who will buy many of the notes you locate. You also have a good program for finding private investors with cash to invest in notes. You pay people like Frieda Finder to find you notes and investors. You also have some of your own cash to use for buying notes to keep in your own portfolio.
You have a business plan that calls for you to broker enough notes each month to give you the cash flow you need, and to keep some of the cash flow to build up your net worth for retirement. You have a sophisticated retirement plan with which you are buying many of your better notes.
You have developed professional contacts with the people who assure your business runs smoothly, safely and legally. They people include:
- An attorney who looks over any new contracts you may need. He will also advise you in case of technical problems, legal questions or real estate complications.
- An appraisal service that can do “drive-by” appraisals. This service is fast and reliable. They will give a “quick sale” appraisal figure within 48 hours, and a written report with pictures of the subject property and comparable sales within 3 days.
- A Credit Bureau that can give you an immediate credit report on a potential note payor. This credit bureau is also fairly good at locating payors when you do not have their Social Security number.
- An escrow officer who can do all the work on your note purchases. He is knowledgeable about all the endorsements needed, he is responsive to phone calls, and he is reliable and personable when dealing with your note sellers.
You have developed a sophisticated direct mail campaign to find new note holders, and you receive about four inquires per day. You buy three to five notes per month. Your profit is $3,000 to $7,000 per note, with an average of $5,100 gross profit per note.
You have a small executive office where you meet clients. You have a home office that has your computer, a Fax machine, four phone lines, and a direct address printer. You have a half time secretary, who just comes in the morning. Most of your expenses are for your direct mail campaign, postage, printing and graphic arts. Your overhead is relatively low.
You gross close to $170,000 per year, and net around $110,000. Your business is continuing to grow and you feel that your net income will increase every year.