One of my first jobs as a kid was mowing lawns. I liked mowing lawns, and for the most part I still do. You are outdoors, enjoying nature in the back yard, the smell of freshly cut grass, and getting a little exercise. But the best thing about mowing a lawn, at least for me, is you get to see immediate results. Whether you mow in a circle or back and forth, when you make that pass, you immediately get to see results from your effort. And then you get paid.
That doesn’t always happen in the note business. There is a considerable amount of time and effort that goes into a successful note purchase. From sourcing the note, preliminary due diligence, submitting indicative bids, negotiating the counter-offer, finding the right funding partner for the specific asset, ordering BPO’s and O&E’s, then reviewing them when they return, coordinating funding, signing note purchase agreements, and wiring final funds to complete the acquisition. Whew!!! That made me tired just typing that. Yet, it was easier to type it than to do it. Most of what I typed above is compressed into about 10 – 15 days; and that’s if you finalize the transaction. It’s been said that for every 10 bids submitted, you eventually close and fund on 1, maybe 2. Considerable effort is rendered with assets you never consummate.
Typically, you don’t get paid until later. As I’ve mentioned in these emailers multiple times, with every transaction, the intended goal is to find a viable workout solution to keep the homeowner in the house. If that is successful, then some cash-flow begins within a couple three months. If that doesn’t work, (and it only works about 30% of the time), then the return doesn’t often happen quickly. When I’m talking to a potential joint venture investor, one of the inevitable questions I get asked is “How long does this take?”. I like to set the expectation of 12 months, plus or minus. I’ve had some that take about 6 months to liquidate, but I’ve got one currently that is in month 13, and due do the time line in this particular state, I’ve got to wait a couple of more months. Each asset is unique, which enhances the intrigue, and leads to eventual rewards.
January, and this past week in particular, have been a beast. I purchased two notes last week with the assistance of two awesome investors. I’ve got two more still waiting for some information from the note seller that are placed with two other great investors. I’ve got a couple of tapes that are in the preliminary due diligence phase that have a deadline approaching. Finally, the house shown above is one that will fund this week. As mentioned a few weeks ago, my goals for 2018 include acquiring 60 notes. That breaks down to 5 a month. January appears to be on track. However, don’t mistake being busy with achieving results.
I like that old question that asks “How do you eat an elephant? One bite at a time.” January is my first bite of the elephant. What’s on your plate this month, and for this year? You only obtain results if you play the game. If passively investing in promissory notes secured by residential 1 – 4 family real estate (that’s a mouthful) whets your appetite, touch base with me this week. Results happen.
Before I go, I will be speaking at the NE Metro (Vancouver) Meeting of Northwest Real Estate Investors Association on Monday, January 22nd at the Round Table Pizza at Salmon Creek. My good friend Carl Royer hosts that meeting every month, has has asked me to talk to his group about note investing. I invite you to come and hear a bit about my business, enjoy some pizza and network with other real estate investors.
Together, out potential is infinite!
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