How to make money buying debt

June 30, 2011 - PRLog -- Debt purchasing is still a cottage industry but it is growing rapidly with the amount of outstanding debt that accumulates during a recession like we have now. I have been in the business of buying debt now for over five years, and while it is not a get rich quick scheme it does provide a good amount of passive or active income. For some it can work as a primary source of income, but it is important to be educated on the proper way to purchase and manage debt portfolios if you want to be successful.

The most commonly asked first question by a prospective debt buyer is how much to initially purchase to be successful. The true answer to that depends on the type of debt you are looking for and your collection strategy, but the quick answer is enough to purchase a few hundred accounts at least. You have to realize that the collections business is based upon a certain percentage of debtors being able to "get back on their feet" in any given period of time. When a buyer purchases thousands of accounts at a time the returns are usually pretty steady, but when one only buys a few accounts, they can severely limit the possibility of those accounts being profitable for them. Sometimes they run the risk of losing an investment on a bad batch of accounts, and that can leave a bad taste for an investor. There is safety in numbers when it comes to buying debt.

The second thing to be mindful of is how you manage the purchased portfolio. While this opportunity can bring in significant passive income when you place your accounts with a good collection agency, a debt buyer needs to make sure that adequate attention is being given to their accounts. Collection agencies get their bread and butter business from direct issuers that place their accounts, so a smaller debt buyer can fall through the cracks quite easily. Regular follow up and accurate periodic reporting from the agency can help you ensure that the agency is working your accounts effectively.

This is a very brief introduction to the business of buying debt, but is a taste of the educational resources available to you at http://buyingdebt.org. Also available are listing services for those that wish to purchase or sell debt portfolios, as well as live chat support for prospective debt purchasers and those looking for assistance with purchased portfolios.