Connecting the dots with note-investing

I watch the commencement speech by Steve Jobs at Stanford University frequently because it resonates with my note investing journey, especially his “Connect the dots” analogy.

My first investment was in a Credit Union certificate of deposit, the CD had the information of a borrower and a loan number, so the credit union was being transparent that I was buying a partial note or part of a mortgage.

I never thought much about until I was recently asked to speak at a real estate investors meeting, after reviewing my experience I noted I have been note-investing since my first investment.

My first experience with real estate

After my first engineering job, I decided to join Remax until the next big challenge showed up, I just did not want to build real estate paradoxically I found it to be boring.

As a realtor, I had to learn how to value assets, and this was a very hard task because we had no MLS, Zillow or Trulia for my local market. Furthermore, the county had no reliable prices of recently closed transactions.

Thru some hard work and experience, I was able to estimate prices very precisely.

Experience with debt

While I was developing real estate I had positive cashflows at different stages of the project that needed to be put to work, therefore, I invested in receivables (factoring), as expected some receivables became non-performing, and we had to work thru them. Not to mention some of the construction customers that became non-performing as well.

Developing and rehabbing real estate

While managing a construction company I had to work on several rehab projects, some were as small as a 10,000 sqft hospital up to a 700,000 sqft commercial mall, I can’t say rehabs are my favorite, but I have done quite a few.

Planning

In the year 2013, I took my skills to the next level formalizing my project management skills with a PMI certification. I gained a firehouse of knowledge on in every phase of a project.

Working with investors

While developing real estate projects, capital always is a big issue, and banks are only willing to finance so much in third world countries.

Therefore, I had to work with other people’s money, some would invest a lump some secured by a unit, which we sold at a discount. Regular customers bought units on a payment plan helping finance the construction.

In both cases, I felt they were all investors and needed to know frequently how their investment was going.

How it all comes together

When I was first introduced to notes in 2016, I noticed that it had every aspect of my expertise.

When buying non-performing note we need to assess the property value (dot), we need to evaluate the debt (dot), we need to plan exit strategies including rehabbing properties (dot), fund investment with joint venture partners (dot), execute and monitor exit strategies (dot), and close the investment (dot).

I immediately knew that I have found what I needed to do.