Note Network

Running The Numbers For Business Success

Westminster, CO (February 20, 2007) Despite some people's perception, being a successful note professional is not about having in-depth knowledge of finance or even about real estate investing. The most profitable players in the secondary note market aren’t math whizzes or numbers people – they have simply taken the time to learn some basic concepts and learned how to find people who need to exchange their future note payments for immediate cash.

That being said, there are a few instances where taking a matter-of-fact look at the numbers behind the industry directly relate to creating success as a cash flow expert. Take the three following business suggestions to heart, and you’re likely to exceed your expectations of how quickly you can build a profitable note-finding practice.

Follow up with "your people"

If making consistent profit as a note pro is not about knowing numbers and math, then what is at the heart of it? Many experienced cash flow finders would agree that it's about persistence and building relationships.

There are two reasons for this. In the note business, new entrepreneurs often approach note holders, buyers, and other finders without an introduction. Even with polished "people skills," it can take time and sometimes repeated interactions with new acquaintances before trust and rapport can develop.

New finders need to pursue a business relationship or transactions beyond a single meeting, phone call, or email. It's understandable to be wary or guarded when interacting with someone for the first time – for some people, it's their natural response. When you add the fact that some note holders are completely unaware that cash flows can be sold, it's likely that they will only warm up to you after a few times.

The results of research conducted by the National Sales Executive Association (NSEA) – a trade organization for professionals – illustrate this point clearly. Their statistics demonstrate that most successful deals are NOT made right away, or even on the second, third, or fourth interaction.

In fact, the vast majority of business deals are struck on the fifth contact, or higher. Here is the data compiled by the NSEA regarding sales per contacts ratios:

2% of sales are made on the 1st contact
3% of sales are made on the 2nd contact
5% of sales are made on the 3rd contact
10% of sales are made on the 4th contact
80% of sales are made on the 5th -12th contact

Here are a few more numbers regarding repeat networking/prospecting. It is a very safe assumption to say that the vast majority of note finders will "let go" of a lead after three tries. And, based on the information that most deals are closed on the fifth contact or lately, can you see that putting out just 25% more effort than your competition (by making the fourth contact) could improve your number of successful deals by 100 percent?

If your information and instincts tell you that you've got a live one, don't miss out on a profitable deal for want of an extra postcard, email, or phone call.

Use referrals to build your business

Marketing to professionals can be very effective for any small business, but especially for note entrepreneurs who don't have the budget for expensive advertising. Building a friendly yet professional rapport with other business people in related industries will encourage them to connect you with anyone they encounter with a note for sale.

The best thing about referral business from networking is that they tend to reward you with more and more profitable connections over time. The effect is that your business will grow naturally without increasing your marketing budget.

Let's say you build solid relationships with five CPAs, attorneys, title clerks, or builders. These five theoretical contacts could easily produce more leads for future deals than a short-term mail campaign that costs far more. How? Because if you have five professionals on your side, now you could be turned on to all potential note deal associated with any of these CPAs or attorneys' clients. Plus, these professionals interact with others like themselves – and that is another indirect way that you will have access to those five contacts' friends and associate client bases.

Eventually, your efforts in establishing contacts in related fields who know about your cash flow services will pay off. Here are the statistics that show how effective business referrals are:

"cold-calling" in person: 15%
telephone solicitation: 16%
direct mail (postcards, newsletters, etc): 22%
other methods: 15%
referrals: 32%

As you can see, referrals are the most effective for generating business – even though in many cases, you can build your referral network for free.

Focus on the "low hanging fruit"

In the note industry, there are cash flows secured by all sorts of properties – residential homes, manufactured housing, entire developments like apartment complexes, empty land, and even non-real estate property like businesses, airplanes, and payment streams like annuities or lottery winnings.

A note finder’s fee for their assistance in matching a buyer to a note seller varies and could be as much as a five or six figure sum – typically when the note balance is in the hundreds or even millions of dollars.

This fact leads many new finders to focus on finding notes that are secured by a large commercial building, a complex portfolio of retirement properties, or any other atypical, "big money" situation.

While it IS possible to make more per transaction this way, this is not a smart strategy. Why? Because the numbers show that it's to a new finder's advantage to seek smaller notes than to concentrate on only the "big game."

Most of the notes listed for sale in North America are secured by private residential properties (SFRs) or small businesses. The overwhelming majority of notes offered for sale have balances of $100,000 or less – on average, about 60%. The number of cash flows available for sale that have balances in the six, seven, or eight figure range is much lower.

With substantially more notes in the five-figure range on the market to pursue, beginning note finders have better odds of finding and making a profit on these deals than with complicated, high-dollar cash flows that often take much longer to close – even if they can find one! There are also many, many more note buyers that can add a $50,000.00 note to their portfolio than can afford to pick up a $500,000.00 deal.

The raw numbers say that concentrating on notes with lower balances is a much better long-term strategy for aspiring note finders than looking for the much rarer and more difficult big-ticket note. So while it's certainly OK to investigate larger deals, don't miss seeing the forest for the trees and pass up all sorts of profitable cash flows as a result of looking "too high up."

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Financing Without Banks: What You Should Know

Westminster, CO (September 8^th, 2005) (NAPSI) A new trend dubbed "peer-to-peer" financing is emerging in the crowded real estate financing arena and it's already more common than most people think. The concept is simple: instead of borrowing money from a bank or other financial institution to purchase a home or small business, private individuals become the lenders. Surprisingly, this "new" trend isn't so new at all.

People have been lending money this way for hundreds of years. Even Before there were banks, lets say, if someone wanted to buy a wagon from their neighbor, or even a local merchant, the buyer and seller simply agreed to the price and the terms, and the buyer made installment payments directly to the seller. No bank or lending institution was involved. Today, these simple and effective financial arrangements are making a comeback.

The Untapped Peer-to-Peer Lending Market: Cash Flow Notes

Private financing is an attractive option for many transactions, particularly real estate. Now a $200 billion industry, peer-to-peer seller financing is a growing, global phenomenon. Already, the sale of most small businesses incorporates peer-to-peer lending and one in 13 American homes is purchased using these cash flow notes.

Currently, there are approximately $200 billion in real estate notes. In fact, there are so many cash flow notes in the U.S. alone that if you could find and purchase $1 million worth of notes every day, it would take more than 700 years to find them all.

Two Ways to Make Money

Many private lenders would sell their notes if they knew the option existed-just like banks do every day. This creates an enormous profit potential in a hugely untapped market.

Most people get started in cash flow notes by simply matching a seller-someone who's holding a note-with a buyer and then collecting a fee for making the match with no capital outlay required.

Today, thousands of people all over the country have tapped into this trend and are making a full- or part-time salary in the cash flow note industry. For more information, visit www.DalbeyEducation.com

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