Posted by Darrick on December 30, 1999 at 21:20:58:
Have you ever attempted a bond deal before, if so what where the details of the successfully transaction?
The transaction that was presented earlier utilized zero that are purchased at a deep discount and even though they have a face value of 100K, this is definitely not attractive to the seller.
My idea is to use corporate bonds that are income producing them and can be purchased at a discount but offer better returns and are easily converted to cash for the seller purposes. And there would be enough bond for the up front cash needs and future obligations.
Posted by Darrick on December 29, 1999 at 15:33:21:
Has anyone ever used the method Gary D. Ford present, using corporate bonds to purchase real estate. If so have you had any success? If not what replies did you receive from property owners?
My firm uses corporate bonds all of the time. We just bought a ten million dollar office building for one million, using corporate bonds to capture the deal.
If you have any deals we pay finders fees see below:
Delta Partners Properties Inc
P.O. Box 153 ~ 2406 State Highway Rt. 80 ~ Vanhornesville, New York 13475 ~ USA
Phone 315-858-0893 ~ Fax 315-858-0894 ~ Home Phone 315-858-1463 ~ Email jabsr@telenet.net
Nationwide Buyers of medium and large foreclose ~ properties for over 20 years
December 29, 1999
Dear Seller of Foreclose Properties (REO’s) ,
We are a Private Real Estate Investment Firm, looking to buy immediately medium and large properties
nationwide that is in either pre-foreclosure, foreclosure and post-foreclosure stages. Our buying criteria
is as follows:
Must have a cash flow
Must be available for immediate possessing
Must have a complete set of books, records, rent roll certificates etc.
WE must be able to acquire the properties with little or no money down
If you have any properties meeting our buying guidelines email the specific information to us and we will
get back to you within 24 hours.
Re: Gary D. Ford and Bonds - Posted by Darrick Tayor
Posted by Darrick Tayor on December 29, 1999 at 20:10:51:
Hi jabsr,
Are you using the same techniques that Gary presented in his seminar?
Do you find sellers to be responsive and receptive to the idea of subordination of collateral?
When I first attempted to explain the concept, sellers were reluctant and I was not able to explain to them that they would still have all the cash require as if it was an all cash deal. So how do over come this reluctance?
I use zero’s as a selling technique. Run an ad stating that I have seller financing and that if they complete the contract without any problems and no late payments, they will recieve all payments back. I hold the zero in excrow. I require 20% down for the people to do this. I have them lined up. I have just started using CD’s that pay annually to purchase property and have not had much luck yet as most of the people I have contacted don’t seems to be sellers but owners (seller wantabe’s). They just want to talk and talk about the property when I want to talk about the deal.
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.
Re: Gary D. Ford and Bonds - Posted by phil fernandez
Posted by phil fernandez on December 29, 1999 at 20:33:20:
Darrick,
It’s almost impossible to convince a seller to take bonds for their equity. Years ago there was a guy by the name of Pauleson who was tooting his horn about this technique. He was using zero coupon bonds. These bonds would mature in 25 to 30 years. What seller is going to wait that long for their money. A zero coupon bond with the face value of $100,000 that matures in 30 years could be bought for say $8,000. The idea was to convince the seller to accept this bond with the face value of $100,000 for his property worth $100,000. Of course you only paid $8,000 for the bond.
If a naive seller thinks that bond is worth $100,000 and accepts your deal and than finds out it’s present value is only $8,000, plan on a trip to court.
The bonds for equity in real estate deal is too goofey and as you stated it is difficult to explain the concept to the seller.
Posted by Bassman on December 30, 1999 at 08:15:40:
So why not buy $200,000.00 worth of bonds for $16k and explain that they will be getting double their equity back, and that they now have their retirement fund secure. Show them on paper that the return of the investment of their money.
Just my thoughts.
Scott
Posted by Darrick on December 29, 1999 at 20:46:36:
Phil,
You are right…this guy Gary Ford was explain the technique using commerial properties, were you would buy enough corporate bonds to offer to the seller which could be sold in the market for the cash equiv. as if you offered a discount to the buyer of all cash deal.
Posted by Darrick on December 30, 1999 at 11:17:41:
Scot,
That is a good idea, it comes down to explaining to the seller the advanatges of having the bonds that can be converted to cash when need and when they mature they can fund their retirement funds as an exmaple.
Posted by Joe Kaiser on December 30, 1999 at 20:32:50:
The idea was never to give them a $100k bond (that you bought for $8k or less) for their equity. The deal was to secure their loan with your bond. That way, if you missed a payment, they got the $100k bond, which, by the way, was worth no more than you paid for it.
Totally bogus.
How do you explain to a seller about “the advantages of having the bonds?” You don’t . . . there are none.
Posted by Darrick on December 30, 1999 at 21:18:25:
Joe,
Have you ever attempted a bond deal before, if so what where the deals of the successfully transaction?
The transaction that was presented earlier utilized zero that are purchased at a deep discount and even though they have a face value of 100K, this is definitely not attractive to the seller.
My idea is to use corporate bonds that are income producing them and can be purchased at a discount but offer better returns and are easily converted to cash for the seller purposes. And there would be enough bond for the up front cash needs and future obligations.