Buy my own note at a discount - Posted by Derek

Posted by John Merchant on March 12, 2006 at 13:40:23:

Good idea and it’s great it worked for you as you wanted.

MM is absolutely right that the constant “dripping on the stone” is effective, and the constant reminder to the creditor that he can come up with extra cash whenever he might need it, does indeed frequently pay off.

Although your plan worked for you, a safer way would be to send an unsigned copy of your check with a little note saying the original check is being held by Honest Escrow Co, and he can go get it whenever he wants in next 30 days.

You’d also deposit a Satisfaction of Note and Release of Deed of Trust with that escrow company, so he couldn’t get the check without signing both the other docs.

I’ve seen it work a number of times that the Debtor has been able to buy this own note at a discount.

Buy my own note at a discount - Posted by Derek

Posted by Derek on March 10, 2006 at 05:06:35:


About a year ago, I bought some raw land on owner contract 20% down with a owner held note for the remainder 20 year amort, 7%, 5 year ballon. I have the money to pay this off. Is there a method to use to buy my own note from the seller at a discount? I do not imagine he would be open to this type of deal if he new it was the buyer asking for the discount. How much of a discount is standard on raw land notes?

Thanks in advance for any reponses. I love this board

Keep a substitution of collateral in mind - Posted by John Behle

Posted by John Behle on March 16, 2006 at 13:07:36:

If now or in the near future your contract owner isn’t open to a discount, keep a trade in mind.

People that don’t understand the “Time Value of Money” have a hard time with discounts and unless they need cash can be highly resistant. Yet, there are people out there that will discount and do need cash. So, there is always the possibility of buying anohter note at a discount and using that as collateral for this note - thus releasing the property - that is then refinanced for the capital needed to buy that other discounted note.

If done properly, there can also be the possibility of keeping the seller’s “installment sale” tax treatment if that is one of the reasons they sold on a land contract or a benefit they enjoy. Sometimes that is why people don’t discount. Not too often, but I’ve had anxious calls from people where a note was being paid off and they were very upset about the tax consequences. That is part of what created this technique for me.

A substitution of collateral is an excellent option for other scenarios like a defaulted note with a bank. “Mr. Banker, I’d like to give you better collateral” and then you substitute a note bought for a discount for a defaulted or risky note with the banker and refinance the property to solve the problem (and buy the discounted note). It’s a great technique to bail people out of over-leveraged properties.

Program to buy your own note - Posted by Michael Morrongiello

Posted by Michael Morrongiello on March 10, 2006 at 21:20:20:

There is no need to be covert. Simply each month send in a little note with your checks to the Note holder that says; “If you ever need additional cash, please call me as I can prepay all or part of our Note for a nominal discount” - this plants the thought in the Note holders mind to contact you should the need for cash arise in the future and it opens that dialogue for discusssion.

Once you reach an agreement, make sure the Note holder issues a property satisfaction or release of their lien against the property.

As for what is a “standard” discount - there is none!

Its all negotiable between you and the Note holder. I have used the following language with Note holders I have been paying on in the past;

“Mr. / Mrs. Note holder, I may be coming into some cash in the next month or so, and I was wondering - IF I can pay you off in full on this Note, would you accept $xxxx?..” - this will get the negotiations off and running.

Best to your success;
Michael Morrongiello

Re: Buy my own note at a discount - Posted by Captain Phil

Posted by Captain Phil on March 10, 2006 at 08:46:40:


Here is a method I personally used to obtain a $43,000. discount on a note I was making payments on. When it was time to make my monthly payment I included a second check. The second check was written for the amount I wanted to pay for the note. On the back of the check I wrote a little contract. Something like
(By depositing this check ______ agrees to accept $___ as full payment for the promissory note dated ___ for the property located at____________with an approximate remaining balance due of $___. ____ will record a proper Full Release of Deed of Trust within 30 days of depositing this check.This check is void after //.)

It worked for me but talk to an attny. There may be risks. If you go for it let me know how it works.

Phil Camenisch
US Note Group

Dear Mr. Behle - Posted by Adrian Martinez

Posted by Adrian Martinez on May 13, 2006 at 11:55:07:

My gut feeling is that you are the most experienced
person in your field. …and I’d deeply appreciate your input.

I’d be MORE than happy to share any profits generated with your


I’d like to make offers on property that is cash flowing , like

Rentals or Apartments , or Businesses…where the seller

can carry back some , ( or all ) financing on.

My associate bought a 5 Mil Self Storage facility

in South Carolina a few years ago .

The buyer bought the 5 Mil cash flow producing property

by having the seller dip into their own equity , and outright

purchase Life Settlement policies maturing in about 7 years.

A or AA rated. The Seller’s Attorney and CPA LOVED

it because it was all Tax Deferred.

The buyer got the property for NO down .

The seller effectively disposed of the property in a Tax

friendly to the seller method , using his own funds or equity …

or borrowing against the propertie’s own equity to BUY these

bonds essentially.

The Buyer of the paper, ( bonds) can get …as you and I can get

these policies for about 85% return in 60 months or 100% return

in 70 months. Fixed /Bonded return date , A rated

essentially about 35% face value cost today

to get 100% of face value in 5-7 years.

If a seller of 1 Million dollar property , that is cash flowing steadily …

can TAKE 800K now via a mortgage, I can get the seller to take a Note for

200K appx in 5-7 years in a lump sum that costs

me 100K … that could be about 100K or more appx in equity

from day one…

I’m interested in learning the most effective , highest success ratio

in using the substitution of collateral method or partial finance

and note method to get funded.

Incidentally the A rated insurance policies can be had


I’m interested in learning how to quickly access a sellers’

equity to finance my acquisition of a property or business.

I also found a group that can provide collateral for RE purchases

in RE Notes for $25,000 per Million in collateral .

I’m interested in using their services possibly.

What options do you think are ways that are the most

attractive to both me the buyer, and the seller to liquidate

their property/business/RE?

I appreciate your information Mr. Behle.

I’d be MORE than happy to pay you at closing

for assisting me in sturcturing creative offers

with your suggestions and guidance.
Sincerely, Adrian Martinez