Question 2 from Course - Posted by Reif

Posted by John Behle on March 26, 1999 at 15:10:08:

Yes, it still gives us a good yield. Yet, there are many advantages to the note seller using this “Amortized Partial” approach. It is like a “Reverse Annuity Note”. (R.A.N.)

They’ve solved their problem - which is a need for greater cash flow, not cash. Sure, as you pointed out, the note could be discounted to 37k at a 15% yield. What this means though is that they have achieved their cash flow goal and instead of cash sitting in the bank or invested at a low rate of return, they have cash invested at 15%. It’s a deal for them.

How many notes fit that category? People complain about not knowing where to find notes, yet most of the time overlook the whole purpose. It’s about benefits and needs - not just being a “note buyer”. Find ways to meet the various needs of note holders, property owners, investors, Realtors, etc. and make a profit while doing so.

Sure, like anything else, the note business is a bit of a numbers game. Yet, it isn’t just a constant. You change your numbers and ratios or enter into arenas where the numbers are different by multiplying those numbers by your NIQ (Note Intelligence Quotient).

Creativity in finding, creating and negotiating deals is the key.

Question 2 from Course - Posted by Reif

Posted by Reif on March 24, 1999 at 20:20:43:

In “Advanced Discounting and Negotiation Techniques,” page 15, Under amortized partials, it seems the 50 payments of $1000 would discount at 15% to $37012, which is (about) what the seller’s note would discount to.

So are you just offering the seller another option?

“Hey Sam, intead of a lump of money (37K), I’ll give you $500 (buyer’s $1000 minus the $500 on the seller’s note) a month more for 50 months, then I’ll take the rest of your note.”

I’d rather have the 37K, I think. But if he’s just gonna turn around and invest it, I see how it makes sense to do it this way, depending on what he thinks his rate of return might be.