How to Become A Note Broker

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A note broker connects buyers and sellers of debt instruments called notes. These debts are often connected with residential real estate, but could involve other kinds of debt. A note broker links a person who owns such debt with an investor who is interested in buying it. The current note holder gets cash now, and the investor collects payments over the life of the initial loan. The note broker earns a commission from the sale. Note brokering is also called the cash-flow business, commonly seen on late-night television infomercials.

Get educated. The first step to becoming a note broker is to educate yourself about the business. You will be working as an independent businessperson. Your earnings are directly related to how many note deals you successfully broker.

Build the appropriate business networks. You will need to build relationships with the right potential partners. These include title companies that will inform you of any real estate closings that involve seller financing. You may also need to link up with the investment firms that link investors with note brokers.

Create an advertising budget. You will need to find many note holders in order to build a sustainable business. Create an advertising strategy and a corresponding budget.

Handle the legalities. To legitimately carry out any business activity, you need to have the right legal structure, even if you are a sole proprietor. Online services such as LegalZoom, LegalFilings or BizFilings can help.

Tips & Warnings

  • If you are hesitant to try this independently, look for a job with a note brokering firm or business. This allows you to get more experience while building up the confidence to continue on your own later.
  • Beware of late-night infomercials and their pitchmen who promise you instant wealth in the note brokering business, only if you attend an expensive seminar or buy an expensive home-study course.

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