The 4 Signals Note Investors Should Watch For When Choosing A Partner

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The 4 Signals Note Investors Should Watch For When Choosing A Partner

I picked up an orange the other day. I had been looking forward to it all day long.  I could imagine the sweet juice bursting from the cells in the orange as I would bite into it. I eagerly peeled it, taking in the aroma as it spread throughout the room.

As I pulled the sections apart, I could tell something was wrong… they didn’t feel right.  But I ignored my feelings and delved into the orange with a vigor that could only be described as lunatic. To my chagrin, the section was dry and woody, and so was the next and the next.

I tossed the orange, disappointed that I didn’t get the treat I had been anticipating so much. Little did I know that that experience would be telling of another I have come across. That of choosing an investment partner only to find out that they are not a good fit. In fact, sometimes they are even crooked.

When you choose someone to do business with, you need to know who they are, how they treat the borrower, how full of integrity they are and ultimately how comfortable you are going to be working with them. I have outlined in 4 simple steps, the things to look for in a business partner in general, but in a Note specifically.

1- Who are they?

When you are shopping for oranges, you need to remember some basic rules that you had to learn. You either learn the rules by experience, or, if you are wise, you learn by the experience of others, perhaps the grocer. The grocer will tell you what signs to look for to get a sweet, juicy orange: heavy for its size, smoother skin, large navel (on a navel orange), etc. She knows these things because she is familiar with these fruits.

Likewise, you need to either learn by experience (I suggest that this is NOT the way to do it) or better, learn by the experiences of others who are familiar with this investor. Interviewing past partners is a good place to start.  Also, check how they have handled their notes in the past.  Did they board them? Get them recorded? These simple actions can be good indicators on how they will behave in larger transactions as well.

2- How do they treat the borrower?

You can tell a lot about a person by how they treat those whom they have power over.  In this case, an investor holds power over the borrower, so is that borrower treated with respect and kindness or brash arrogance?

The way they treat their borrowers will also be an indication of how they will treat you or any other partner after the “honeymoon” stage.

3- Integrity

The foundation of a good partnership is integrity. Being trustworthy, honest and forthright are critical character traits you need in a partner.  That way, they are more likely to keep you apprised of changing events, things that need to happen and other information you may need to make decisions on your investments.

4-What do you feel?

Sometimes people mistrust their gut feelings.  Remember my experience with that orange? If I had trusted myself, I wouldn’t have had the less than pleasant experience I did.

So, trust yourself.

You call tell if someone’s attitude and carriage will be congruent with yours. If their personality clashes with yours, then your partnership will be brief at best. And catastrophic at worst.

As you go about in your note investing journey, pay attention to these little tells that people give off. Learning them can save you a load of grief and a lot of pain, too.

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Saprina is a nationally recognized expert in mortgage and trust deed investing. She has over 18 years of collections and mortgage experience, and has worked debt portfolios for both national financial institutions and individual note investors. She has extensive experience with loan modification, foreclosure, short sales, cash for keys, and mortgage deficiencies. Saprina is a sought-after speaker and readily shares her knowledge and experience.