Click here to download a
word doc of this session
Updated 11/16/06
With our coaching sessions I will
be taking you through the steps to be successful in this business. I will teach you this business the way that I
have run the business and the way I have found it to be successful. Some of the insights I will give you may be
different from the basic material you have so far. I will draw from my experiences to help you avoid
the pitfalls of going it alone and learning from your own mistakes. Understand that I can give you advice but I
cannot do the business for you. I will
work with you as much as I can and hope that you will put the effort into this
business so you can be successful.
As
we go through our sessions I will give you assignments to help accomplish
success in your business. I will follow
up with you each week to hold you accountable with the time you have spent in
your business.
If there is ever an issue that comes up that may hold
you up or slow you down I need to know about it immediately. Please do not wait to let me know about
issues that you run into. Email me right
away when you need assistance or call the hotline. Do not wait till the next week to let me know
you had a problem or question if it is going to slow you down.
You are starting a
business that will take time and effort.
This is not a get rich quick scheme.
It is very important that
you realize that and that you are willing to put some serious work into it.
One of the first things you need
to do as you start your Notes business is to write Goals. You will want to know where you are going and
maybe more importantly how to get there.
Below are some areas I suggest for you for writing goals. These goals are for you. They are to guide you in your pursuits. You will not need to share them with me. Put some thought into them and be personal
and specific.
When I
talk about goals I am not just saying to write something down that you wish for
or hope for. I mean to have you write
down a list of what you want to accomplish in these areas and then Write down
what you think it will feel like and what life will be like when you achieve them. Then think about the work and sacrifice it
will take to accomplish them. Don’t just
write them down without realizing that there is work involved to get there.
1) Make a personal Goal. (something you want to do or change with
yourself)
2) Make a Physical Goal. (Something for the body. Exercise, nutrition…)
3) Make a relationship Goal.
(Something to strengthen a relationship in your life, partner? Friend?
Family?...)
4) Make a Family Goal. (A goal for close family? Extended? Your own?
Future family?...)
5) Make a Financial Goal. (What you want out of this business. Long term and then break it down to a weekly
process)
ORGANIZATION
Once you have your goals down and
have “the end in mind”, (7
habits of highly effective people, Stephen R. Covey) , now it is time to organize your
business;
1) First get a planner for weekly
schedules. (Computer, palm, notebook,
Franklin Covey, Day runner…) This will be used for both the time management of
your business. Know when you are working
in the business and what you are doing with that time. This is crucial to your
success! I recommend that you use an
electronic device that will beep at you to remind you when you have things to
do. If you will make sure you schedule
yourself and the time you are going to spend with your business then you will
find more success in your business.
2) Also for taxes. The benefits from taxes will pay for your
business within the first or second year!
Make sure you get some competent advice on this subject.
Before I go into some
of the business info I want to clarify what we are dealing with in this
business. I have listed below here a
brief explanation of what a note is. It
is very important that you realize that we are not talking about investing in
property in this business. A note
investor is not interested in buying property.
A note investor is similar to a Stock investor. The main difference is that the person
investing in stock does not have a guaranteed return. The note investor has a guaranteed return on
his investment backed by the Real Estate.
The actual investment is just the payments. Let’s look at how a note is created:
Johnny seller wants to
sell his house for $100,000 and he has had it on the market for a while. Finally someone comes along and says they are
interested in buying it but they do not want to get a conventional loan. They can put a down payment down but they
would like Johnny to “carry the balance” in a note. This means that the seller and the buyer will
create a contract that states that the buyer will pay Johnny $XXX per month for
XXX# of months. They have just created a
note. Johnny sells the home and gets a
down payment and then starts to receive the payments each month. Johnny is a note holder. He no longer owns the property. He sold it.
He does own the note which states that the payor has to pay him each
month for the privilege of claiming ownership for the property.
We are looking for 1st
position notes. We are not talking about
a second position note. Seconds are not
sought after very often at all. If they
are purchased they are going to be at a very steep discount.
Definitions
1.
Real Estate
Note: A Real Estate Note is a written
document that states a promise to pay for a Real Estate purchase and the terms
of that purchase such as the amount due, payment amount and interest rate and
length of time to be paid…Real Estate Note, Trust Deed Note, Mortgage Note,
Promissory Note, Land Contract are all the same thing.
2.
Seasoning: Seasoning is the life of the loan. If it has been around for a year it is
considered seasoned. If it is less than
a year old it is considered unseasoned.
Unseasoned notes can still be very good notes to deal with. This is not the only deciding factor in
selling a note. I have personally made
money on notes that were unseasoned so I recommend you do NOT limit yourself to
just seasoned notes. Work with anything
that comes your way.
3. LTV:
Loan To Value which is the total loans or liens against a property
divided by the value of the property then converted to a percentage. (ex.
.85=85%)
4. Equity: opposite of the loan
to value figure.
5. Amortization: length of time
to pay off the loan in full with current payment setup.
6. Balloon:
Lump sum payment usually due at the end of the note term. (interrupts the amortization)
7. Wholesale Offer: This is an offer from a note buyer when they
are NOT planning on paying the closing costs.
8. Retail Offer:
This is an offer a note buyer when they ARE planning on paying the
closing costs.
9.
Underlying
Loan: This is a loan that the note
holder owes held by a bank.
10. The Players:
You are an Investor in this business.
It is very important that you think of yourself as such. If you want to be successful in this business
you will need to consider yourself an investor.
With each deal that is done there is a possibility to have four
players.
1)
Investor: person who will be buying the note
for this deal.
2)
Broker: person who works for the
Investor. Does the paperwork and a lot
of the prep work for the investor
3)
Finder: Person who finds the note info and
refers it to the broker or investor.
4)
Note holder:
Person who sold the property and holds the note.
Now we need to understand what is
involved in this business. It is very
important that you realize and accept that this is not a get rich quick
scheme. This business will take time and effort.
If we simplify the whole process we have the following steps;
A break down of
the business process;
Foundation work & Preparation
Finding and Marketing to note
holders
(This will require a marketing
budget and maybe a few marketing campaigns.)
Gather the information and find
out their expectations
(Here you will want some sort of
database to assist in keeping track of details.)
Present the note to investors
Present an offer to the note
holder
Complete the deal with paperwork
and follow-up
Homework
for your first week includes the following items:
1] Write Goals
2] Get a planner
3] Study the basics listed in the link below:
Details on the business.
Click
here for articles and info on the Real Estate Note business.
4] Create
business cards and setup a business name: Use a local phone number for the cards.
This is something you will use when talking to local professionals. A business name is not necessary at this time
but you will want to start setting a business up. Get the cards with your name and basic
contact info on it if you need time to set up the business. The business cards are used so people can
contact YOU. It does not matter what
your business name is. If you wait on
this you are holding your entire business up because of a $5.50 expense. Get some now and change them later if you
want to, but get them. J
Go to www.vistaprint.com for Free business cards!
Click here for an example
business card.
5] Toll Free Number: It will be important for you to setup a toll free
voicemail number in order to get more calls coming in from your marketing.
The note holders will be more likely to call if they don’t have to pay
for it. So, don't forget to get
your number. You
do not need a new phone line put into your house for this. These numbers are
completely independent of any phone line.
You check the messages over the computer.
Click Details for Toll Free info. I use the ureach.com option and they have
worked very well for me for the past two years.
6] Make your own luck! Click here to read an article about
making yourself lucky. I do not believe
in luck, good or bad. We each make our own
“luck” by how we react to life around us.
Take the fear out of what you do and you will be successful.
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