Joshua Andrews - Paper Profits:How to Buy and Profit from Notes: A Beginner’s Guide: Learn the nuts and bolts essentials of owning mortgage notes

Paper Profits: How to Buy and
Profit from NotesA
Beginners Guide

Learn the nuts and bolts essentials of
owning mortgage notes and why these
assets consistently out-perform almost any
other investment ever created.

JOSHUA N. ANDREWS

Copyright 2017 by Joshua N. Andrews

All rights reserved.

Published in The United States of America

ISBN-13: 978-1541296015

ISBN-10: 154129601X

No part of this book may be reproduced in any form unless written permission is granted from the author or publisher. No electronic reproductions, information storage, or retrieval systems may be used or applied to any part of this book without written permission.

This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.

DEDICATION

To my friend Bill McCafferty, who has done more than anyone to help me learn, grow and profit in this business.

CONTENTS

ABOUT THE AUTHOR

Joshua N. Andrews specializes in buying and selling mortgage notes with an emphasis on distressed assets. His passion is financial freedom through sensible investment choices. He believes in todays economy the real currency of life is time, not money.

In addition to debt instruments such as notes, Joshua has experience with single-family rental properties, small multifamily syndication, and stock-related assets. He is cofounder and CFO of Notable Investments, LLC. He has held the position of loan originator with two banks and is federally licensed through NMLS. He currently resides in Austin, Texas.

PREFACE

I believe everyone should strive to be financially independent. Achieving that, as I define it, means having a cash flow large enough to cover your living expenseswithout having to drag yourself out of bed and into an office each morning to earn it. I have a favorite analogy that explains how I look at investing. In the days before agriculture, tribes would get up each morning to forage for food. Each day was the same. Wake up and gather the days food. Then along came farming and agriculture. Now the tribe could work hard on the front end, planting food and tending crops, and then reap a large and more predictable harvest. Their existence became much more predictable, less tenuous. They could also store part of this harvest to reseed next years fields, which meant their crop yield would grow over time. They could predict with relative certainty how much food they could expect to grow the following season. No longer was theirs a day-to-day existence. This changed everything. And it literally allowed people enough free time to break away from the cycle of merely surviving. It gave them more time to spend on worthwhile endeavors such as philosophy, art, music, medicine, and science. Ultimately, it allowed us to evolve.

Today, much of the worlds population is stuck in a financial rut of day-today existence. Although we benefit from many technological advances, such as cars, computers, phones, advanced medicine, and so on, many of us are still stuck in this cycle of getting up each morning and going to work in order to bring home the proverbial food to pay our bills and feed our families.

We are, at some level, just financial hunter-gatherers. We need to find a more effective way to earn an income. A way that helps provide a continual supply of money that meets our needs so we can expand our interests and make our lives richer. This includes spending time with loved ones and family and having the time to contribute more to society. To me, this represents our next evolutionary step. Regardless of how much money you make, if you have to be physically present somewhere to earn it each day, it could all stop if you dontor cantshow up.

Financial independence is certainly not easy to achieve. Theres no real shortcut to riches. It takes time and a plan to become truly stable. It takes financial knowledge and personal grit, and it may require you to take a few well-calculated chances. The long-term rewards, however, are more than worth the struggle.

It all hinges on acquiring assets that produce cash flow. I can think of few things better to strive for.

INTRODUCTION

T he desire to share the biggest financial discovery of my life motivated me to write this book. By all accounts, its a secret hiding in plain sight. Its not a get-rich-quick scheme or a new hot stock tip. In fact, its been around for hundreds and hundreds of years in many different forms.

Im talking about promissory notes, mortgages, or, as theyre more often known, notes. If you own a home, you are all too familiar with that monthly mortgage payment that goes to the bank. But have you ever wondered what the bank really does with those payments? There is a whole side of the mortgage industry that most people do not even know existslet alone understand.

I worked for several years as a loan originator, approving mortgage loans for people, but it took me a long time to fully understand how they worked. Like most people, I thought banks made money simply from charging the highest interest they could get away with on their loans. This is not the case. This book will show you how much more profit there is in buying a promissory note than is commonly thought.

In this book, I share the fundamental information about mortgage notes you will need to understand what makes them great assets to buyfor small and large investors alike. I will show how you can start buying them with as little as $10,000 and generate wealth, security, and ultimately a safe retirement.

Like most individual investors, you probably do not know much about this topic yet. I will do my best to speak in plain language so that even if youve never heard about these debt instruments before, you will come away with a good understanding about how to evaluate, buy, and sell them yourself. You will undoubtedly have questions after reading this book. Thats OK. Feel free to reach out to me.

It takes a lifetime in the mortgage market to completely understand its every nuance. You can make excellent profits with notes, however, using a basic understanding of how they function and where the opportunities are. My hope for this book is that it will help open your eyes to this unique investment opportunity. It can change your financial lifeit has mine. We will take a birds-eye view and cover the basics, answer some commonly asked questions, and briefly touch on more advanced ideas. I will share a few personal, specific deal examples as well. After you understand the fundamentals, you will be ready to analyze, buy, and profit from these little gold mines yourself!

If you are a seasoned note investor with a few deals under your belt, you will still pick up a good idea or two from this book. If you are a novice just learning the ropes, I recommend starting from the beginning and reading the book straight through in its entirety. This is about education, becoming financially literate, and having some fun along the way.

So lets get started!

CHAPTER ONE

THE ULTIMATE INVESTMENT VEHICLE

Wealth is the ability to fully experience life.
Henry David Thoreau

Why Notes?

T his chapter explains why notes are quite possibly the best investment ever created and how I came to discover this for myself. I will also cover some of the main reasons notes are ideal tools for generating long-term, repeatable returns and sustainable wealth.

For the better part of a decade, I have been searching for a way to create passive income. Im not talking about multilevel marketing income, being self-employed, or having small-business income. Im talking about real, honest-to-goodness income that would come in each month regardless of whether I worked or not. I looked at, explored, and invested in literally dozens of legitimate investment ideas. Thats when I first began learning about commercial real estate. Multiunit buildings like apartment complexes are attractive to investors because they provide economies of scale and promise large-scale passive income. I have also purchased single-family rentals. I have purchased dividend stocks to try to generate income. I have owned a small business. After being actively involved in all of these attempts at generating passive income, however, Ive decided that buying and holding notes are my favorite way of generating income over the long term.