Stop Chasing "Dead Wood": The Modern Strategy for Real Estate Note Investing
The real estate market is shifting, and for note investors, the old ways of finding deals are quickly becoming obsolete. In this episode of Note Night in America, Scott Carson dives deep into why most investors are struggling to find quality owner-financed notes and, more importantly, how to pivot toward a 21st-century marketing strategy. If you’ve been spending thousands on direct mail only to get a 1% response rate, it’s time to stop chasing "dead wood" and start targeting the sources that actually hold the keys to the kingdom.
The State of the Market: 2026 and Beyond
Understanding the current landscape is the first step to successful investing. While foreclosure inventories remain below pre-pandemic lows, the "top of the funnel" tells a different story:
- Rising Delinquencies: 30-day and 90-plus day delinquencies have consistently been at or above pre-pandemic levels for the last 18 months.
- Foreclosure Starts: We are seeing dramatic increases, with foreclosure starts reaching 95% of pre-pandemic levels.
- The "Crumb" Side of Business: Success right now isn't about buying massive portfolios; it’s about making one-off offers on non-performing debt by working directly with lenders.
Why Your Current Leads Are "Dead Wood"
Scott pulls no punches when it comes to traditional lead lists. The "dead wood" refers to recycled, old leads that make you look unprepared on the phone.
- The 85/15 Rule: 85% of seller carryback loans are one-off transactions where the seller only holds one note. Only 15% are repeat investors who create a reliable stream of deals.
- Ineffective Marketing: Sending postcards to owner-finance leads often results in less than a 1% response rate—a massive waste of time and capital for new investors.
- The RMLO Gold Mine: Instead of chasing one-off note holders, you should target Registered Mortgage Loan Originators (RMLOs). In Texas alone, there are over 60,000 licensed RMLOs who are the gatekeepers to quality, compliant paper.
How to Find Deals Like a Pro
To succeed in today's market, you must move beyond Facebook groups and embrace professional networking tools like LinkedIn and NMLS data.
- The LinkedIn Strategy: Use specific search terms to find decision-makers. Target "Special Asset Managers," "Chief Credit Risk Officers," "Secondary Marketing Managers," or "Whole Loan Traders" for institutional debt.
- Targeting the 15%: Search for "Seller Financing Experts" or "Owner Financing RMLOs" to find the professionals who originate quality notes regularly.
- Leverage Servicing Companies: Use the NMLS consumer access page to find the 235+ servicing companies nationwide. Reach out to their business development teams to see if they have clients looking to sell notes.
- The "Relationship" Approach: Take local real estate attorneys or title company reps to lunch. One good relationship with a professional who handles owner-financing is worth more than a 10,000-piece mailer.
The secret to winning in the note business isn't working harder; it’s marketing smarter. By shifting your focus from "dead wood" direct mail to high-level professional relationships with RMLOs, asset managers, and servicers, you position yourself to see the deals that never hit the public forums. It’s 2026—your marketing should reflect the technology and data available to you today. Stop fishing in empty ponds and start building the network that feeds you for a lifetime.
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