Re: software to pick the right Bonds - Posted by leslie
Posted by leslie on December 30, 1999 at 03:52:46:
I learned of this oh, about 15yrs ago and have some software on a vintage 5 1/2" floppy disk to help you structure the deal. As I learned it the bonds are not given as a “trade” but are held in a pledged account and used as collateral to secure the seller financing.
This type of financing is also known by such terms as “walk the mortgage”, and “substituted collateral”.
Junk and low grade bonds were fun to look at because of the steep discount. Hey, good old Bank of America was a famous one in that catagory at the time. (A junk bond? I should have loaded up on those. You actually keep the bonds if you make all your payments as agreed ). In reality any bond could be used, not just junk bonds. For tough customers the best AAA or Gov’t bonds could be offered. One could mix the portfolio of bonds so some would mature and pay off a balloon payment at predetermined times that the seller might need cash, such as children’s college expenses, retirement and so on.
If you think thats too hard, try offering no collateral, just a personal unsecured note for the equity. I’ve done that and suprised myself.
Now if you get one of those even close to accepted, and you will, then maybe throw in some bonds as additional collateral. Now you are improving the situation and it may help get you used to the concept. Heck give 'em a $5k bond you buy for $500 as a gift, a signing bonus. Possibly, you suggest, it be placed into a child’s account for 10-20 years.
Funny thing, I got more than one property with unsecured notes, and I never did use any bonds.