Discount Mortgage Note Broker

The brokering of Discount Notes and what are termed “Cash Flows” is a subset of the attractive professional note investing industry.  While most who become involved in this industry focus on investing in notes (and in particular, mortgage notes) for high-yield returns, there is a popular related industry of brokers or “finders” who seek out notes for note investors and in return, earn a finders fee or commission.

Note Investors

Note investors use their own savings or capital they have raised to purchase consumer paper.  This can be anything from buy-here pay here auto paper to rent to own furniture.  By far, however, the most popular product area is residential owner financed mortgage notes due to its exceptional collateral.  All such note investing is considered sub-prime since it usual involves an owner who could not qualify for a traditional mortgage offered through a bank or similar institution.

Note investors most often will “discount” their purchases.  This means that a note originated at say 8%, will be purchased at less than its remaining face value to yield 10%, 12% or even higher.  It is not unusual for investors to purchase smaller notes, such as notes collateralized by a mobile home, to yield 18% or higher.  Note investors are experts in the use of a financial calculator capable of solving Time Value of Money problems. More on mortgage note investing.

Note Brokers

Rather than investing in mortgages, note brokers use various marketing methods to seek out holders of mortgage notes that need to raise cash for various reasons and are willing to sell their high-yield notes to do so.  In their valuable role as “finders”, note brokers usually align themselves with one or two institutional note buyers who will pay a “finder’s fee” for quality referrals that result in a successful note purchase.

Brokering “Cash Flows”

For note brokers, the “cornerstone” product area is residential mortgage notes although many will also delve into the “traditional” note broker product areas of…

• Business Notes:  Private notes held as a result of selling a business
• Structured Settlement Cash Outs:  Lump sum cash outs of annuities based upon an award by a court or insurance company.
• Gaming Awards:  Annuities awarded to lucky winners of Vegas-style gaming.

Success in Discount Notes and Cash Flows

Without question, note investing and note brokering are exceptional (and popular) vocations.  From a cash investment standpoint, however, they are at opposite ends of the spectrum.  Note investing requires capital and lots of it.  Note brokering is probably one of the least expensive entrepreneurial enterprises to launch.  It is very, very networking intensive but requires little in the way of other expenses.  In fact, if you are very active with social media, online networking, and blogging you can be in the industry as a finder, operating at full throttle, for less than $20-$30 per month.

Successful note brokers (finders) spend endless hours building relationships that can lead to referrals.  The larger your network, the more referrals will come your way.  It takes time and persistence, however, to develop these relationships and the problem most common among those that enter the industry is they lack the perseverance and ability to stick with it.

Blogging, Affiliate Marketing and This Enterprise

Because of time it takes to build a solid network of sources of referral in this industry, blogging and affiliate marketing are playing a larger and larger role in broker productivity.  In fact for many brokers, setting up a blog along with “high pay” affiliate marketing products is one of their primary sources of revenue.

Expanding Opportunities

Of all the various enterprises available as business opportunities, few can compare when it comes expanding the note business into other opportunities.  Since discount notes are basically a real estate product, practitioners in this vocation have the opportunity to expand their business into such areas as…

• Cash Flow Brokering (more info)
• Real Estate Wholesaling
• Lease Option Investing
• Mobile Home Investing
• Fix and Flip Opportunities

Quality Training and Note Broker Support at DataMax

Quality training in notes and cash flows is difficult to obtain at what could be termed reasonable prices.  This is a very specialized industry and requires specialized knowledge.  It is not unusual for recognized industry training companies such as Rich Dad Education to charge upwards of $5,000 for specific “live” industry training classes and roughly half that for extensive “On-Demand”.  There are exceptions to that rule, however, with note investment companies such as Charter Financial of Houston, TX, offering a relatively high quality training program for just two to three  hundred dollars.

Pro Plan at DataMax for Note Brokers

Success in notes means spending considerable time face-to-face networking in your local area and even more time on social media such as Twitter, Facebook, etc.  Your goal as a note broker is to drive visitors to your website literally on a daily basis.  But often, this means driving visitors to your blog first.  The single most important component to successful social media networking is a maintaining an interest blog and driving visitors to it using Twitter, Facebook, and other social media.

Pro Plan ($99.95 plus hosting) at DataMax provides you with…

• A WordPress Blog (see samples)
• Basic blog setup
• Access to the expansive note broker marketing support areas at DataMax