Posted by David Alexander on April 28, 2000 at 19:00:09:
A much needed one.
Continuing my conversation w/ John Behle. And anyone else who wants to pitch in. - Posted by The Baze
Posted by The Baze on April 27, 2000 at 22:11:41:
I took a peek at your website yesterday, but I did’t get to do a whole lot of reading. Please forgive me if I’m asking very basic questions, but the paper business is very new to me. So let me get this straight. Person A sells his house and carries back a $50,000 note @ 10% interest over 30 years, pymts of $438.79. Twenty four payments later the balance is $49,415.49 and A wants to sell. I’d like to get 20% on my money, so I offer to buy the note for $26,225.45 (assuming I’m using my TI BAII Plus correctly). Problem, I don’t have $26,225.45. So I can borrow from a financial institution (not one of my favorite options) or from a private investor. Am I correct so far? I don’t want to broker this thing, I want to buy it. How can I go about this?
Now I know the answer could be a whole course, so what I want to know is, does your course go into step by step detail about how to carry out this type of transaction? I need details. Don’t tell me to get from Florida to NY you go north til you get to Ohio, then head wherever. Tell me take such & such road for x miles, then take this road for so many miles. I need step by step instructions.
I’m sorry I’m rambling on, but I’m really intrigued by this paper business, and I know almost nothing about it except that it exists, and folks are making money off it. I’d like to see if I can be one of them. Thanks.
Tom Bazley
Re: Continuing my conversation w/ John Behle. And anyone else who wants to pitch in. - Posted by Bud Branstetter
Posted by Bud Branstetter on May 03, 2000 at 09:27:44:
Tom,
The road map you seek exists only within you. The key to being able to buy the good note deals is, as you perceived, finding the money. John’s course will tell you to find private investors to borrow from. Great idea. Now just go do it. In reality most banks won’t lend on the note. Especially to someone they do not do a large amount of business with. Finding those private investors, IRA’s is the subject of several courses.
There is also http://www.fnacna.com/ that may in effect loan you the money. Before you rush headlong into borrowing you need to learn about the business. Broker some notes, go to the Noteworthy or Papersource conventions and take some courses.
Re: Continuing my conversation w/ John Behle. And anyone else who wants to pitch in. - Posted by John Behle
Posted by John Behle on April 28, 2000 at 23:02:40:
Carol’s post pretty much covered it. I borrow against the notes and make my money off the spread. Of course the 20% yield is a little high figure to use in this market, but as rates fluctuate - it’s all relevant.
When yields go down, so does my cost of money and vice versa, but there is always a spread of at least a couple percent. The nice thing those is yield and rate fluctuation is a wonderful factor. Rates dip and I can refinance out with a new investor at a lower rate. Payors also refinance…
That’s where the real fun comes in. They refinance and I get paid off early in full. I pay the investor out and keep the windfall profit. I also encourage people to pay off early by offering a discount.
Park City Training! - Posted by Jim-WI
Posted by Jim-WI on April 28, 2000 at 08:52:29:
Baze
John’s paper game video course explains a lot of information about paper. It’s really good!
Order it and come to the Park City training with us!!! After all, I believe it’s still free with the purchase of the course! You can’t lose there and look at all the knowledge you will have gained! =)
Right so far… - Posted by CarolFL
Posted by CarolFL on April 28, 2000 at 07:52:32:
So, you want 20%, but your investor is content with 15% … afterall, he’s been getting 12, so 15 is great, right?
You’ve got a 5% spread.
Now, if the 50,000 note is by chance on a 60,000 house (for argument’s sake), and you borrow 65% of the face value of the note (32.5) which is still only 54% ltv on the property, your payments to the investor are $412.94 (for his 15% yield), which gives you only a $27.85 spread but $6241.42 up front.
Or, if you prefer the spread and don’t need any ‘walking around money’ borrow the $26258.58 with payments of $332.02 and that gives you a monthly spread of 106.87.
In either case, John can then teach you ato ‘improve’ the paper and increase your yield, which is why the first scenario could be interesting … you can have your cake and eat it too.
So … why don’t you join us in Park City in july? You’d have a ball, and this is what we do for “5 sunny days and 5 exciting nights”?! (And we are bringing Cash Flow 101, as long as David Alexander doesn’t come!)
While I’m … - Posted by David Alexander
Posted by David Alexander on April 28, 2000 at 17:43:31:
Rolling on the floor (You Know the Rest), let me add.
Or the other Scenario after you bought the note (but, not before you knew the payors credit, etc.) would be able to run those folks into a mortgage broker and have them refi, maybe for some incentive like a trip to DisneyWorld or something. After all when you cah that note out and get the profit out well, you’ll have just pocketing some healthy change.
David Alexander
One version of - Posted by CarolFL
Posted by CarolFL on April 28, 2000 at 18:18:03:
“improving the note”, wouldn’t you say, David?