Can you make a living as a cash flow note broker?

Can you make a living as a cash flow note broker?

If you listen to the pitches for the multi-thousand dollar seminars, you will 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 for some folks, 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? Without investing money in advertising? Would you expect to start making a profit immediately? Would you think you´d make $100,000 your first year? Would you think you might be making half a million or more real soon?

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 cash flow brokering courses, seminars, boot camps, mentoring, coaching, etc. is 99% in the first year. (That´s not a figure I just pulled out of a hat. It comes from a study by NEWSWEEK.)

HOWEVER, the reason for that statistic is that nowadays the majority of people trying to broker notes heard about it on a TV infomercial, 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 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.

Who are you guys & how do I know I can trust you?

Let’s see…Would it convince you if I said, “Hey, we´re different! We´re not in this for the money, we do it because we love you!”?? No, I didn´t think so. So how do you know that we´re not a bunch of con artists? One way I check people out is to look at their feedback on eBay if they have it. Feel free — my username is reformedelder.

The fact is that we’ve been in business longer than anybody else publishing in this industry. We also put on the first national convention for the industry. We published the first directory of cash flow note investors (and still publish it). My wife Alison and I are the only employees — low overhead means low prices for you. We started buying & brokering notes in the early 1980s and published the first issue of THE PAPER SOURCE JOURNAL in 1987 and have been publishing ever since. And it´s a fact that more cash flow note professionals read THE PAPER SOURCE JOURNAL than any other publication in the industry.

We’ve been quoted in The Wall Street Journal, Newsweek/Jane Bryant Quinn´s national column (several times), USA Today, several national columnists for Gannett and other newspaper chains and more. I could tell you about being inducted into the Mortgage Report Hall of Fame in 1997. I could tell you about receiving the first and only Founder´s Award from the Mortgage Report Hall of Fame, “For Pioneering The Original Industry Newsletter; Establishing The First National Convention For Note Brokers; For Leading Where Others Have Followed; And For His Significant Role In A Developing Industry; This Founders Award Is Conferred Upon William J. Mencarow…” yada, yada, yada. I could tell you about being inducted into The Note Buying Industry´s Hall of Fame (yes, there are two halls of fame; must be a big building) and the crystal obelisk sitting in my office bearing the inscription: “In appreciation of his many years of unwavering dedication and outstanding contributions, William J. Mencarow…,” ditto yadas.

Are you bored yet? Don´t get me wrong, I am very humbled by all this, and I cite them only to put you at ease that we aren´t interested in stealing your money. What we are interested in doing is teaching you more about cash flow notes and giving you more for your money than you will get anywhere else. But you have to decide for yourself if this is true. How do you do that? John T. Reed, publisher of Real Estate Investor´s Monthly newsletter, wrote a great article called “The Real Estate B.S. Artists´ Detection Checklist.” Read it, then test us and everyone else against the checklist. It´s on his website at www.johntreed.com Also check me out at his “gurus rated” page: www.johntreed.com/BSchecklist.html). If you want to know more about us, click the tab “About Us.”