Note brokering involves finding a seller of a promissory note and connecting them with an investor. They earn a fee for their services. Real estate notes are the most common form of note that is brokered.
Many infomercial note brokering courses offer lists of “note buyers” and “note funders.” Then the new note broker calls them up with a deal. This is known as the daisy chain and it’s bad for everyone involved.
Profits
Note brokering is a business and can make you a great income. The key is finding a good number of sellers and buyers. Real estate notes are the most common type of notes brokered but there are many others including business notes.
Note brokers often charge a fee for their services that may be a percentage of the note or a flat fee. They also earn additional income from debt servicing and collection fees.
A good note broker can generate impressive profits in a relatively short period of time if they can find enough note sellers. However, repeat customers are rare in this type of business.
The most important thing for a note broker is building his sphere of influence or collection of people who know him and trust him. He should seek out local community and regional banks and approach them about offering a note sale. Those institutions are under-served by the national note exchanges promoted by seminar hucksters.
Education and Training Requirements
Professional note brokers must have the knowledge to understand the market, find buyers and sellers and structure deals. They also need to have the skills to assemble documentation, close transactions and manage post-closing responsibilities. They should stay informed of industry trends and regulations to ensure they are operating within the law.
Many seminar hucksters claim that you can make great money from home with very little start up cost. This is a very misleading statement and usually targets stay at home moms or retirees who are looking for a second income.
To become a licensed note broker, you will need to have a license from your state that requires passing an exam and background check. Depending on your jurisdiction, you may also need to be familiar with real estate laws and investments to obtain a license. In addition, you will need to have experience drafting documents such as promissory notes, deeds of trust and security agreements.
Online Platforms
Professional note brokers earn profits through commissions based on successful transactions between buyers and sellers of notes. These professionals are also responsible for ensuring compliance with regulatory requirements, handling documentation related to the sale of notes, and providing ongoing support for their clients after closing a transaction.
Online platforms are an effective way for professional note brokers to connect with potential buyers and sellers of notes. These platforms can also help them build relationships with private investors and institutions to increase their chances of successfully brokering a deal.
One such platform is BankProspector, a free service that helps real estate investors, note brokers and REO agents find lender-direct non-performing and performing mortgage notes. This platform provides bank data, decision-maker contact information and “sell” indicators to help note buyers and investors target banks and credit unions. Another option is Notes Direct, an online marketplace for residential and commercial mortgage loans. This site offers a wide variety of loan types including both performing and non-performing mortgage notes.
Networking
To excel in the note industry, successful note brokers must develop sturdy professional connections. They should immerse themselves in local business events and community organizations to mingle with real estate professionals who may refer clients to their services. They must also employ personalized outreach techniques, such as sending hand-written notes and offering value-added services that align with their clients’ needs.
In addition to cultivating fresh alliances, note brokers should also consider attending networking conferences to learn about emerging trends shaping their industry. Moreover, social media hubs like LinkedIn are a mighty weapon in the arsenal of note brokers seeking to amplify their presence beyond conventional networking environments. This is because they provide an opportunity to build rapport with prospective clients and cultivate meaningful relationships over time – all while remaining ethically sound. Additionally, leveraging these platforms will help them manage post closing responsibilities related to transactions involving notes, such as ensuring compliance with regulatory requirements and handling documentation associated with the transaction.