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Purchasing mortgage pools during the present liquidity crisis presents a significant investment opportunity. But success requires a little planning. Today, many investors are spinning their wheels bidding on one mortgage pool after another without success. To be successful you must plan and choose carefully what you will spend your time bidding on. You must know your investment market niche and preferences. You must decide what your investment goals are. You must make a plan of action and execute that plan. Finally, you must know what your bidding on. You must know what the sellers expectations are and you must be able to meet those expectations. If you have a mission statement, you should first consult it. Your mission statement should give you meaningful and measurable criteria for guiding your investment decisions. Does investing in mortgage pools fits within your mission statement? If it does, does it give guidance on defining what types of mortgage pools will meet the mission statements goals? If mortgage mortgage pools don't fit your mission statement then maybe you should revise your mission statement. Alternatively, maybe investing in mortgage pools isn't for you or your corporation; you need to carefully weigh this decision.

If you don't have a mission statement, you need one. A mission statement will give you meaningful and measurable criteria for guiding your investment decisions. Start out by carefully defining your market niche and preferences. This can make the difference between long-term success and long-term failure. Companies who too narrowly define their mission often disappear when markets evolve and change. Companies who too broadly define their mission have no direction and often suffer the same fate. If you're investing in real estate backed notes or mortgages, define your market carefully. Your market may be a specific region; it may be certain types of notes (i.e. residential, commercial etc.); it may be restricted to first mortgages or it may include second mortgages. What ever your looking for, make sure you have defined it and then stick to it.

Next decide what your goals are. These goals should be meaningful and measurable. They may be varied and some goals may be apposed to others. You may have a goal of minimizing risk and another goal that seeks a minimum return of 10, 20, or 30 percent. Higher return generally imply higher risk. You must be able to define and reconcile these goals in relation to one and other. Another possible goal may seek to invest a certain sum of money in certain types of investment such as mortgage pools. The targeted returns may be indexed to a certain interest rate index. Only you can decide what your goals are. But don't make any rash decisions until you know what those goals are. Once you know what your goals are, you must then have a plan of action.

Since the topic of this article is investing in mortgage portfolios, I'll assume that mortgage pools fits within your goals as defined by your mission statement. Therefore, you need to have a plan of action. This plan should give you direction on how you might find mortgage pools. It would also guide you in the types of situations in which you would bid and those in which would not bid.

There are both exclusive and non-exclusive mortgage pools. Non-exclusive pools may have more than one company promoting the pool. Exclusive pools are offered by only one company. There are also two types of bidding situations. There are mortgage pools that are very widely publicized and which go to the highest bidder. And there are exclusive pools which are offered for quick sale. These are often sold to the first bidder meeting the targeted price mark.

If your plan is to bid on the most mortgage pools as possible, you'll probably be bidding on a great many mortgage pools that are widely publicized. You'll probably have many competitors and you may not achieve your desired results. Years ago I made the decision that if I was going to give bids, I didn't want a lot of competition. My decision paid off and I won a lot of bids.

I wasn't bidding on mortgage portfolios but the same principal applies. I was bidding on landscape construction projects. I was a construction project manager for the developer of a large planned community. We started an in-house landscape company and needed to keep them busy. At first I bid on everything I could find. I won a lot of bids but unfortunately the contractors I bid for didn't win the bids and I didn't get any work. As a result, I decided I wanted to get on exclusive bidders lists. I wanted to bid for contractors who actually had work or who were negotiating contracts. This paid off.

I specialized in meeting the needs of the buyer. Often their architects gave them extravagant plans that they couldn't afford. I would show them how they could make little changes that would save them big money. This met their need and it got their attention and I won bids as a result.

You can do the same thing when buying mortgage pools. You can be selective. Know what your bidding on and who your bidding with. Do they have an exclusive on the pool or portfolio or is it being shopped around by everyone? Do you know what the sellers expectations are and can you meet those expectation? These are important questions. Once you know the answer, you can determine if a particular representative is providing pools that meet your goals and action plan.

Today time can be as important or more important than price. If you're bidding on an exclusive pool with no or few other bidders your on a good start. If you can meet the sellers price and closing time-line, you've got it made. Finally, don't be afraid to offer more than the buyer expects if a higher price is within your goal range. Remember, you do have competitors. If you offer more than competing buyers, you may end up getting a much bigger piece of the pie.

John Durr is owner of Summit Note Services. He has access to mortgage pools from many financial institutions. These financial institutions are looking for immediate sales and quick closings. The pools he has access to are exclusive. They are being offered exclusively by one firm representing these institutions. His access is expected to continue through the current liquidity crisis. If you are looking to purchase pools of $2 million, $10 million or much more contact him. You can contact him through his website or email him at sellnote@iglide.net.

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