A lot of very successful mortgage note investors started off as note brokers because it is an easy way to enter into the mortgage note business without using any of your own money in the deals.
Becoming a mortgage note broker requires that you have developed the ability to find note sellers and connect them with buyers or investors.
For most people, the idea of becoming a successful note broker seems like a challenge but in this article we will show you the most important things in the note broker business and our 4 step process for making money as a mortgage note broker.
In this article, we will show you 5 proven note-flipping strategies that you can start using today
Here’s what’s on this page:
- What is a note broker?
- Advantages of being a note broker
- How to become a note broker
- How to make money brokering notes
- Learn how to find note sellers
- Our four-step process for finding note sellers
What is a note broker?
A note broker is someone who finds notes, whether its promissory notes or letters of credit, which they then sell to the end buyer or investor.
In many cases, the note broker will make his fee from the end buyer.
Though, it’s not uncommon for banks or other financial institutions to employ the services of a note broker for the disposition or sale of non-performing or even performing notes.
Advantages of being a note broker
There’s still very little licensing for brokering notes although as note investing has become more popular, several states have added some licensure.
Note brokering is an “eat what you kill” or “commission only” role which means that your income potential is completely uncapped.
Real estate brokering can be done by anyone from anywhere so long as you have a phone and computer
How to become a note broker
Becoming a note broker in name is as simple as stating that you are in fact one and then finding the buyers and sellers of notes and putting them together for a fee.
Since there is no specific note broker licensing, certainly not at the federal level but only across a handful of states, this means that you can get up and running very quickly without government-mandated training
If you want to become a successful note broker you really need to be able to do just two or three things.
The most important thing you need to be able to do to become a note broker is to be able to find the notes and to find note sellers. That is the most important highest-paying task in the note broker business and it is the task that we focus on most intently at distressedpro.com and in our training
The second most important thing that you need to be able to do as a note broker is find the buyers or investors for your notes. There are a lot of ways to do this but in today’s environment, finding investors isn’t the challenge it’s finding the sellers.
In fact, our training comes with a continually updated database of pre-vetted verified investors. And there are many other ways to find your own investors including online groups, LinkedIn, your own website, and many other resources. There’s a seemingly endless pool of investors today seeking stable returns like those you can achieve through note investing.
Learn How to Source Note Deals Direct from Banks
The most important job for a note broker is finding notes.
If you can’t find notes to broker you cannot succeed. When you can reliably source notes the buyers will follow and your business has no upper limit. Learn how to source bank direct note deals in this free streaming web class.
The third thing you need to be able to do is help communicate the value of the notes to the end buyer and assemble the documentation necessary for evaluating the investment and for closing.
Once you can do these three things and so long as you have evaluated the locations where you’ll be brokering notes in order to ensure that you’re operating inside of the law, then you’ll be a note broker.
How to make money brokering notes
There are lots of ways that you can make money brokering notes and here are just a few.
You can represent institutional sellers like Banks and credit unions in the disposition of their most frequently non-performing notes.
Local community and Regional banks are under-represented when it comes to note brokering and note sales.
While big Banks like Bank of America, Chase and others employ large national note brokers like Mission Capital or DebtX,these advisory firms all but ignore the bulk of our nation’s nearly 12,000 institutions. This provides a huge opportunity for anyone ambitious enough to make the necessary connections at those institutions to represent them in their mortgage note sales.
More often than not, buyers are very willing to pay a fee for you to find them notes to buy. Most of the time the fee paid is calculated as either a percentage of the UPB or unpaid principal balance or else is calculated as a percent of the strike price or agreed-upon closing price.
Savvy note brokers know that writing themselves into the deal can be another way to both grow their income and their net worth by making part or all of their fee a part of the deal.
Let me explain. If you found a note or pool of notes for 1 million dollars and you were charging 3% your fee would be $ 30,000, but what if instead of asking for your commission paid in cash you instead took part of the deal in equity? So rather than the buyer paying you $30,000 you instead write yourself into the deal as say a 5 or 10% owner.
This kind of fee structure can help you smooth out the ups and downs of note broker commission income because you’ll be receiving the appropriate percent of the loan payments that you know you own as a partner in the deal. Typically, note brokers will work with many buyers and investors, this means that when you find a pool of notes as a note broker you’re able to market, distribute and sell that pool of notes as you see fit.
This can mean carving off some of notes for yourself, essentially for free by marking up the price on the rest of the notes to your buyers and investors in order to cover the entire purchase. This way you can generate a steady income without any actual cash outlay of your own.
Learn how to find note sellers
In the distressedpro.com Bank direct Mastery training our primary focus is on helping you to be excellent at the most important task in the note brokering business, which is finding notes for sale.
We focus on helping you find those notes from institutional sellers, Banks and credit unions. We do this because institutional sellers are repeat sellers of distressed and discounted assets.
Finding repeat sellers means that you can spend less time finding sellers and more time doing deals. Once you have 2 or 5 or even 10 regular repeat institutional sellers you will have a very good note brokering business.
Institutional sellers tend to be very loyal to their service providers. And the reason is that it makes their lives much easier to know that they have someone or company whom they can count on to continually deliver the buyers that they need.
Our four-step process for finding note sellers.
The first step is to identify a list of suspects in our training will teach you how to identify which Banks and Credit Unions you should call on first.
In step 2 we teach you how to narrow your focus from your initial list and to look at key indicators within the lender’s financial reports that tell us how likely it is that they’re a good note seller.
In step three we identify a list of decision-makers for each qualified institution.
And didn’t step 4 we put this list of decision-makers into the prescribed prospecting system.
You basically have 2 choices
You can choose…
A. The hard way (without BankProspector)
This sounds like a lot of work and it can be without the right tools however it can all be done so long as you have the good excel skills and plenty of time to search and compile leads, contacts, notes, etc
B. The easy way (with BankProspector)
In 2009 we developed Bank prospector which is a data mining sales intelligence tool for distressed asset professionals including no Brokers REO brokers and investors of all kinds.
Our not broker training and training on how to find note sellers paired with bank prospector is an unbeatable combination necessary for anyone who’s serious about the note brokering business.
Bank prospector will show you with just a few clicks which banks have the kinds of notes that you want the broker which ones are likely to sell who works there and much much more. Bank prospector can eliminate hours, days, even weeks of tedium with just a few clicks.
If you’re serious about note broker training then you have to know how to find notes for sale. It is the most important thing, in fact, your business does not exist unless you are able to do this one thing. Our approach to sourcing note deals directly from institutional sellers is proven effective with both new and experienced note brokers.
Our training comes not from one person or a gurus’ experience but instead is a collection of best practices from more than 40 of the industries most prolific and experienced people. Our note broker training is a system that takes you from no understanding of how lenders work to a mastering how to identify your best sellers and how to communicate with and nail down the opportunities with the sellers.
If you want to get off the hamster wheel of continually having to do heavy prospecting with private sellers and if you want to stop banging your head against the wall try to find deals. Then come follow our complete system for finding repeat sellers who sell again and again and again year after year. Start finding notes today!
13 thoughts on “Note Broker Training Starts with Learning to Find Notes”
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Hi Justin, We have 3 lists depending on what you’re looking to accomplish. The Academy if you’re just starting out, BankProspector if you’re actively sourcing deals, and the VIP program if you have more cash than time.
I was thinking about creating quality notes to broker by putting credit challenged buyers together with sellers willing to owner finance the buyer. buyers would be required to put at least 10% down for instant equity above the note…after seasoning for a few months, I would then broker these notes to note buyers …what do you think of this strategy to generate income for myself & a good ROI for note buyers ???
I like it! You’ll have to test it in your area. There are some experts out there on this strategy.
Let me in. I am ready to learn the entire business.
Come on in! Mail support at distressedpro dot com if you need assistance.
I saw your last webinar and I really wanted to get started. After I buy the course how much $$$ will I realistically need to be successful?
Hey Michele, Thanks for the question. If you’re going to buy notes yourself then you’re going to need cash to do that, either your own or other people’s. How much depends on many, many things. Most people who are getting started without their own capital will raise money or broker deals and either make fees for that or else write themselves into the deal and take their fees as as ownership stake in some portion of the assets. Mike Ruscica has a great interview about that here.
I’m trying to get your training course.
Hey Charles, The main training page is here. If you’re a customer and you’re having any trouble at all please reach out to us by emailing support at distressedpro.com or click the blue icon on the bottom right corner of any page and open a ticket with us there. Members can also track their support requests here.