Before the Internet, word-of-mouth and a good reputation were the only two things that mattered. That’s how you found the best restaurants and businesses and how new professional relationships were born.
Well, that referral-based mindset is still very much present and essential in the world of private mortgage notes and note investing.
Referral marketing is all about relationships, and these partnerships take time and care to develop.
How to Build Relationships in Note Investing
The biggest thing when looking for referral sources is remembering that with any relationship, both parties should benefit and feel secure.
When someone refers your note buying business, they are trusting that you will behave professionally as your actions now directly reflect upon them. So, reputation is everything.
While it’s just good business to be fair and reliable, it also affects your ability to find future deals.
And be ready to spend some time.
Don’t expect to start your investing career one day and have everyone ready to hand over their client lists.
The good news?
An investment in time up front means having on-going and repeat business down the road. It’s all about putting in the work now to reap benefits in the future.
So, why would another professional refer you business?
Benefits of Referring a Note Source
Remember, this is a business relationship. This isn’t a friend doing a favor. So when a professional refers your business, they are doing it for a reason.
And those reasons aren’t always the same. The reason a Real Estate Agent, Investor, Title Company, Attorney or a Title Company refers your business will vary.
It could be they want to shift their focus to a different transaction. Or perhaps they are looking for a referral fee or commission split. Maybe they have a client that needs to solve a problem by selling the note for cash.
Whatever their reasons, keep in mind that the referral shouldn’t only benefit you. Be prepared to work with them.
Say Thank You
Once the deal is done and the transaction closed, don’t just disappear.
Whatever the relationship and agreement, make sure to drop back in and say “thank you.”
It doesn’t need to be a grand gesture; a simple thank you note will suffice. Feeling extra appreciative? Everyone loves donuts or a basket of fruit and chocolate.
Referral doesn’t lead to a transaction? You should still call and say thank you at a minimum. After all, they took time out of their schedule to refer you.
And should they ask for a referral in the future? Be ready to give it!
So, now that you understand the referral relationship, where do you find referral sources for note buyers?
5 Referral Sources for Note Buyers
They can come from anywhere! As long as they know of someone receiving payments on a privately held real estate note, it’s a referral source.
However, that doesn’t mean they are all created equal. Some referral sources offer one to two potential clients while others may know of dozens of potential clients holding notes.
So, here are five referral sources to get you started.
1. Real Estate Agents
With their entire livelihood revolving around buying and selling homes, real estate agents will know sellers that walked away with an owner-financed mortgage note.
2. Real Estate Investment Clubs
These are popular places for investors to discuss financing, buying and renting properties.
Our tip? Spend the first few meetings getting to know the agenda and feel of the group. That way when you introduce yourself you have a better understanding of what the group and other members are looking for in terms of new business relationships.
3. Real Estate & Note Investing Meetup Groups
As with the Investment Clubs, local Real Estate Meetup Groups are a meeting of the minds. Even if you don’t always walk away with a new referral source, you can hear how others are handling your seller-financed notes in your area.
4. Real Estate Attorneys
While a more difficult relationship to start, attorneys are a great referral source as smart seller-financers (and buyers) will have their mortgage note looked at by a real estate attorney.
5. Accountants and CPAs
Accountants and CPAs know their clients’ finances and holdings inside and out — including any monthly payments being collected on real estate installment sales. And often when their clients are interested in selling their mortgage note, they will know that as well.
Referral-based marketing and relationships are hugely beneficial when looking for new deal sources in note investing.
They are low cost and offer repeat business with little to no competition.
So, what are you waiting for?