If you ask the coach on any successful championship team, what makes your team so good? He will normally mention everybody from the front office, to the physical trainers, the equipment manager, the players, the coaching staff and most of all the fans. You'll never hear a coach just say that his star quarterback did it all. It's the exact same thing when searching and buying notes. Your buying capacity along with a strong team that can dig deep and uncover any potential pitfalls will equal a winning team.
Here is the list of your key players that will help you succeed in your Note Buying business:
- The Source for Notes: This is a very vital part of your network and you need to find the type of notes that fit your exit strategy models. Reason being is without the right notes to buy; your business will be stagnant. Here are several sources that successful buyers attain their notes; local banks, regional lending institutions, larger real estate investment groups, hedge funds, carefully selected brokers, quality web based loan exchanges and trading sites.
- National Broker Price Opinion (BPO) provider: These companies offer an array of accurate and reliable valuation products. Their job is to help buyers and sellers manage risk and capitalize on market opportunities by giving realistic sales prices on properties.
- Loan Servicer: These companies can service an individual loan as well as any size loan pool for Brokers, Lenders, Institutions and Private Investors. Most successful servicers have the ability to service on a national scale. As an investor, you should have the ability to sit down with the servicer and let them know your exit strategies for each loan or loan pools that you buy. Also, when interviewing your possible servicer, ask them if they have the ability to give a login via the internet to check the status of each loan and monitor the collection/modification process.
- Contractor: Generally, this team member only gets called in when it's time to give a bid on repairs or any type of construction consultation. Many notes that you buy will have a borrower or tenant occupying the property. You won't have the luxury of being able to schedule an appointment to do a walk through with your contractor. Since he is a vital part of your team, he normally get's the call once the property is back in your hands as a Real Estate Owned Property (REO).
- Realtor w/ buyers: It's imperative that you have an agent who is actively involved with the selling of residential real estate. Especially, an agent who deals with investors who are actively buying. The plan would be to list the property about 5% – 10% below market value. If the agent is ahead of the game, he or she would probably have an investor lined up to purchase your property before the listing became live on the Multiple Listing Service. That term is called “double ending” a deal.
My company works with many note investors day in and day out. I've noticed that the successful and consistent note investors all profess to having a team. Hope my knowledge gets you one step closer to your dreams.