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.