Dealing With Rejection as a Note Investor

I’ve been in sales in a variety of capacities since the mid-1980’s. Well really, we’ve all been in sales since the moment of birth. We were pretty convincing at that time, demanding what we needed. Somehow, over the years that changed. But when I started getting paid for being in sales, and understanding the tremendous opportunity for an income that was not capped, the stark realization hit quickly that you will have to deal with objections and rejection through your life. In fact, many sales organizations spend many dollars on their sales team in training on how to overcome objections and facing rejection. 

I remember going to many Tom Hopkins seminars at that time and awkwardly learning techniques to overcome objections. I also remember multiple rejections at high school dances. It stung a bit, but then I learned there were other choices. I had to learn that rejection was simply temporary, and moving on was the solution.

In being a note investor, there are several opportunities to experience rejection. Here are a few that I have encountered within recent weeks:

  1. From Note Sellers. Part of what I do is trying to find the best opportunity for myself and my investor when looking to purchase a note. With that, I am fairly aggressive when submitting an initial bid. Last week I showed your about 10 assets I was working to submit and indicative bid. Of those 10, if I do this right, I’ll likely get 3 – 4 accepted, and end up buying one. I spend a lot of time completing my due diligence in advance of submitting bids, and understanding that the upfront work I do now will payoff later. As they say, you make money at acquisition; you realize the money at liquidation. On one of those assets I showed last week, I had received an acceptance of my initial bid, conditional upon my final due diligence. In reviewing the 3 critical issues on a note purchase (Value, Title & Taxes), two of the three were fine. The Ownership & Encumbrance report showed that the title to this asset was a mess. There were multiple liens and assessments effecting the title of this property. In fact, the face amount  of these liens exceeded $100,000. Although these all were subordinate to the first mortgage I was buying, and likely would have been wiped out in some fashion in the event of foreclosure, there still would have been time and attorney fees involved to clear these liens. I felt it necessary to reduce my bid offer; the note seller didn’t. REJECTION…………………………………………….. NEXT.
  2. Potential Joint Venture Investors. I think that becoming a passive investor along side me in acquiring non-performing notes secured by real estate is a prime way for investors to enhance their investment portfolio, especially when it comes of someone’s IRA. I have discovered not everybody agrees with me. I’ve had a few tell me that this just doesn’t sound feasible, and that the return yields I suggest are inflated. Well, okay, then it probably isn’t the right investment for you. On the inverse side, I’ve had to tell a few potential investors that I didn’t think this would work out for them. I’ve even had one where we were on the verge of making a purchase together, and they suddenly go dark, eventually unsubscribing to my emailer. Still, no explanation. REJECTION……………………………………… NEXT.
  3. Borrowers. Once in awhile, you’ll reach an agreement with a borrower, and when the paperwork is sent for their signature, they go dark. I’m working with my loan servicer with a borrower that really doesn’t have the capacity to keep the house. We’ve looked at a couple of options, but we were finally told that they just want to give us back the house: a Deed-in-Lieu of Foreclosure. This is a very gracious process for the borrower to exit the nightmare of holding a house they can no longer afford. They simply sign the title over to the lender. We sent out all the paperwork, and then nothing. No return of the signed docs, and they do not answer the phone. We are attempting one additional contact, then we might need to initiate the foreclosure process. 

One of the best things about investing in promissory notes is that there remains plenty of opportunities to invest. The map shown above was created from a tape of notes that originally contained over 60 assets, specifically for me, based on my preferred investing criteria. I’ve narrowed that list down to 27. I still have 8 of the 10 shown last week that I will be finalizing this week. A couple of days ago, I received another huge list of 650 assets available. Then there are many of the regular tapes I get throughout every month.

I guess maybe I’ve turn the corner on this rejection thing. With all this product coming my way, I get to be selective, looking for investment grade assets for my investors. I get to say “NEXT”.

I know many are preparing for the Christmas holiday and winding down for the new year. Hopefully you were able to listen to my Friday Stroll video from last Friday. I take a few minutes and talk about reflecting back through the year and reviewing our successes and looking at our losses. If you didn’t get a chance to list, please listen here, and subscribe to my YouTube Channel. Hey, also, connect with me on the social media links below. 

 https://youtu.be/KpeLMrIHAf4

 

Thanks for ready again this week. After taking a few minutes and reflecting back on this past year and where you stand on your investing goals, perhaps we should object to low returns and take a closer look at notes. I’d love to chat.

 

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