Note Business Tip of the Month 

December 2011

For all new subscribers, Welcome! If you have missed any of Armstrong Capital's E-letters just click here to read our Archived Monthly Email Newsletters!

If you have a question you would like to see answered in this newsletter just email Jeff!

Starting next year, in a few short weeks the Armstrong Capital Newsletter and Note Biz Tip of the Month will have a new look and a new name.

Watch for it in January! TWITA! :)

*Tip of the Month: 

       Did you know....

           Focus, desire, effort, knowledge and skill are specific tools of the note industry trade that you must learn to develop through education, association and experience.
 

*Quote of the Month:

         "The expectations of life depend upon diligence; the mechanic that would perfect his work must first sharpen his tools."

                                                                        ~ Confucius

*Question of the Month:

Q - Hi Jeff,

Many are convinced that due to the lack of conventional financing that the amount and quality of existing seller financed notes out there is growing rapidly and will continue to do so for the foreseeable future (sounds logical) - The thing that puzzles me is that when i talk to the seasoned pros out there like you - I hear that the mailings draw a much smaller response than in the past and the deals are much harder to close.

I also sense that the buyers for this product are scarce and have much stricter requirements (Many say the answer here is private lending - to tap into the anxious money coming out of the stock market - sitting in CD''s at 1%). What are your thoughts here?
 

                                                                                - Gordon M.

A - Hi Gordon!

Thanks for the email! You bring up a question I answer several times a week, so let's break it down.

Yes, I am convinced as well that due to the lack of conventional financing that the AMOUNT of existing seller financed notes out there is definitely growing rapidly and will continue to do so for the foreseeable future.

However the QUALITY is questionable with the large amount of notes out there. The buyers credit scores are worse than ever, they are putting down smaller down payments and the collateral value (or LACK of) has been a huge issue as well.

As far as marketing goes, if it is being done properly (not relying on one method but with 3-5 lines in the water) responses are actually better than ever. In my own business my response rates are more than they have been in years.

In dealing with the "harder to close" deals (due to the above mentioned factors) a note broker and note investor needs to be more open and able to negotiate better. One of the best ways (that I have been preaching for years) is to Push the Partial.

Even with low down payments, poor credit and low collateral value transactions can still be closed by using smaller partial options where the investors ITV (Investment to Value) is under say 30-35%. I have been using partials my entire note career. My personal statistics show that over 70% of my closed transactions have been some type of partial purchase option.

Lastly, yes, there has been a reduction in the number of note investors/buyers over the last several years and the remainder of the note investors that are around do have some tighter requirements and for good reason. The note buyers of yester-year were largely buying to securitize the notes on Wall Street. I don't have to tell you how that turned out. In addition note buyers of yester-year didn't have too many issues with collateral value, then the real estate market went down and now they are still cleaning up their portfolios latent with foreclosures and REO's. Note investors in today's market are not going to let that happen again, so their criteria are stricter. As you know, a note investors goal is NOT to get the property back, we want the cash flow to keep coming in.

The answer to survival and growth in today's note market, 2012 and for the foreseeable future are stricter criteria for the note buyers and for the note brokers it is learning to push the partials as well as building up a network of smaller private individual note investors.

Private lending is a whole different ballgame (an entirely different sport even) and if individuals want to go that route they should be sure they know exactly what they are doing.

Those are my thoughts! Hope this helps!

Jeff

Contact Jeff today for information about having him Speak to or Teach your group!

Jeff Armstrong is President of Armstrong Capital. He is a member of the Million-Dollar Club, a Master Buyer, visiting instructor for the American Cash Flow Institute, instructor for Nouveau Riche and the author of several best selling industry books. He can be reached by calling 818-865-2322, faxing 818-449-4840, e-mail jeff@armstrongcapital.com, or visit www.armstrongcapital.com and click on "Note Brokers" for answers, articles and information about his services and how Armstrong Capital can help you succeed.

	Powered by YMLP.com