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Debt instruments, discounted paper, notes, mortgages, debt instruments, income streams, cash flows, cashflows or cash-flows -- no matter what you call it, it adds up to one of the most profitable enterprises in the world. Those who broker debt instruments and/or invest in debt instruments buy and sell debt instruments payments from real estate mortgages, trust deeds, contracts for deed, lottery winnings, structured settlements, annuities, tax lien certificates, royalties, leases, insurance benefits, retirement accounts, consumer products, credit cards, contractor's liens, home improvement paper, medical receivables, student loans and many other debt instruments...there are investors ready to buy the debt instruments paper from virtually ANY transaction in which there is a promise to pay over time. The Paper Source offers proven, real-world guidance to debt instruments brokers (also known as note brokers or cash flow brokers) and debt instruments investors FROM PEOPLE WHO MAKE THEIR LIVING AT IT.
Can You Really Make A Living As A Note Broker?
by W.J. Mencarow, Jr., president of The Paper Source, Inc.
If you listen to the pitches for the multi-thousand dollar seminars,
you can retire rich from your first deal.
Unfortunately, it doesn't work quite like that. The first thing you need
to understand is that the note business is simply another small business.
A very, very good one, true, but still a business, not the magic bean
that will make you rich without working.
Suppose instead of opening a note brokering business, you decided to open
an accounting practice. Would you think you could do this without having
any training to be an accountant? Without investing any money in starting
your new business? How would you go about letting people know of you without
an advertising budget? Would you expect to start making a profit immediately?
Would you think you'd make $100,000 your first year? Your second or third
year? Ever? Would you think you might be making half a million before
long?
Pretty ridiculous, right? You probably know that something like 90% of
new businesses fail in the first five years. Here's our dirty little
secret: The failure rate for people who take the expensive note brokering
courses is 99% in the first year. (That's not a figure I just pulled
out of a hat. To see where it comes from, go to "How
Many Note Brokers Are There?")
HOWEVER, the reason for that statistic is that nowadays the majority of
people trying to broker notes heard about it on a TV infomercial or through
a mass mailing, they were sold on notes as a get-rich-quick scheme and
made all sorts of promises, so their expectations are wildly inflated.
When they find out that it, like any small business, is hard work, they
quit.
There are no studies, but my 20-some years of experience tells me that
the success rate for people without such expectations, who approach this
as the serious business it is, and who have some financial or real estate
background, is much higher.
A final thought: Please, please, please, do not try this without having
another source of income. This is a part-time business for all but
a very few. You'll make a nice side living and maybe someday you'll
go full-time. Let your note business tell you when that time has come.
How do you know? When you discover that you're making more money doing
notes than your regular job, and that you enjoy it more. Then give that
situation a year or two. If nothing changes, then, and only then, make
the jump to full-time.
It's a tough business, and only the most driven, most of whom have another
source of income, survive to become full-time note brokers. They find
it is one of the most lucrative businesses there is. They make a good
to a great living, and the potential is huge.
The top 10 brokers for the biggest note buyer averaged $8.3 million in
volume in real estate notes in a recent year. At an average 5% commission,
they grossed $415,000. This figure does not include profits from brokering
lotteries, structured settlements or annuities, the major categories of
"alternative paper," which typically produce windfall commissions
of tens of thousands and very occasionally over $100,000. At this level
these brokers have a small staff and the typical overhead of a business
of this size. Plus they spend a lot in advertising and marketing. These
are brokers. Investors make more, sometimes much, much more. And every
broker's goal is to become an investor as soon as possible.
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