Posted by John Behle on November 07, 2000 at 19:06:45:
This is an answer to an email question I received.
All the discussion and many of the problems in the note industry have to do with an emerging and evolving business.
The note business is in a "Standard Industry Life Cycle" in the "maturing" phase. Excuse the big terms, but every once in a while I have to try to use some of my finance degree and justify the time and expense.
In short, the small one man office note buyer that there used to be 20 years ago is being replaced(?) by systems and more volume.
There are probably 100 times the note brokers there were 15 or 20 years ago. Large institutions have come in with money and seminar mills have generated thousands of students. It leads to a "three tiered" segmentation of the industry.
A couple years ago, Jon Richards (Noteworthy) asked to republish one of my newsletter articles I had written a half a dozen years earlier about the future of the note industry. It pointed out the money coming in, the new "brokers" being churned out and the role some of the old broker/buyers would take in packaging, pooling and helping the newbies.
In the maturing stage of a Standard Industry Life Cycle, there is consolidation, conglomeration and in the end generally three players at the top. Others either have to align with the players or work a "niche" market to survive.
The whole scenario of "Brokering" notes didn't happen much 15-20 years ago. Local buyers were actually buyers. They worked with their own money and investor's money - on a local basis. It's the seminar industry and in particular the high priced ones that have glamorized the "job" aspect of the note "brokering" industry.
As you'll see over and over again, I teach and encourage people towards the investment aspect. Notes as an investment and a tool - not as a commodity to sell.
How many note brokers make a 6 or 7 figure income? How many make 5 figures? Most are in the 4 figure range. An old style note buyer/problem solver can make 6 and 7 figure incomes from one note deal. It takes more expertise, access to capital, problem solving abilities and a rounded, general, broader real estate background.
It's like with the discussion you referenced. I stay out of it because it is not how I do business or advocate for others. I don't broker notes. It's a rare scenario where I broker a note or pick up some fee as a broker. I've never sold a note to American Note and would consider it as somewhat of a failure on my part to broker a note. As I've said again and again, it's a good place to start - but there's more - much. much more. Once you've learned the basics, you learn funding and begin buying instead of brokering.
I can show you a fairly recent deal where we made more in one transaction than all but the very top of the brokers and I'm not sure they even make that in a year. I can show you one transaction a few years back where the profit exceeded what a top broker would make in 15 years of hard work.
So, what you'll learn at the bootcamp - the focus - is how to be independent. You may still broker notes to start, even continue to broker those that do not meet your criteria. You may broker some for cash flow at first - but - when you see the upside potential of buying, funding, trading and improving notes, you will do all you can to NOT broker them.
Sorry to the funding people, but I teach what I believe and what I know works.
My focus isn't to teach you how to broker 5-10 notes a month trying to make a decent income. My focus is to teach you to buy as many notes as possible - while still putting food on the table - and to use creativity to create as much profit from one note as someone else might make in brokering 10-20.
As I said in another post somewhere, today's current yield in our note purchases is a minimum of 18%. Most of our capital cost is less than half that. Most of the yields are far above. I just don't have any great desire to fight amongst the "brokers" for the easy to find "good" note that they can broker.
I like "The Good, the Bad and the Ugly". I am a resource to the other brokers. In my world, they are my employees, not competition. I buy what they have no clue what to do with. Not because it is all that hard, but because the average knowledge of the average broker is so very basic and limited. Limited because there are very few people in the note industry that teach anything remotely similar to what I do.
Reality is some just have no clue. Others have a different agenda - be their birddog. I don't view my students as dogs. Over the years only a couple might be mistaken for one - but I view them all as someone wanting to build an abundant lifestyle and retire with passive income from a note portfolio. Brokering is a job. I teach note investment.
- Re: Brokering vs. Buying Lauren Hofmans 14:37:11 9/06/2002 (2)
- Re: Brokering vs. Buying Lauren Hofmans 14:36:56 9/06/2002 (0)
- Re: Brokering vs. Buying Donald S. Vizcaino 14:20:07 7/28/2002 (0)
- Re: Brokering vs. Buying Mark Parris 00:08:56 11/11/2000 (0)
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