Two twenty thousand dollar cats - Posted by John Behle
Posted by John Behle on March 26, 1999 at 15:45:22:
I’ve always liked the example of the kid on the street trying to sell his dog for $40,000. Each day a man came by and laughed. One day the dog was gone. The man jokingly asked “did you finally sell your dog?” The boy replied “no, I traded him for two $20,000 cats”.
It’s an old story from the exchange world, but it has helped shape my philosophy. There’s lots of people out there with dogs they are trying to sell. You can argue with them, tell them they’re stupid and beat them over the head with your calculator…
Or… You can just go find two cats.
In the case of lenders, they may balk at a low ball cash price. It’s always worth a try, but they may be more open to some attractive terms or something like the trade of another note - that you buy at a discount.
Maybe it’s a problem note that was in default and now you’ve cured it. (SEE POST on “Sweating is for Saunas”).
They might take commercial notes, land notes, higher LTV’s (then they would normally buy) or even a created note by you. The created note can look like some terms that are soft enough to give you your margins.
Remember the “Price vs. Terms” teeter totter. A couple percent drop in interest rate or a payment moratorium can make as much of a difference as thosands less in price.
So, try the straight forward discount approach. If no luck, try a note trade or creation of paper that will yield you profit in the long run. So what if they are hard fast on their price - lower the rate, rehab it, wrap it and sharpen your letter opener for the checks that come in.