TIGER BY THE TAIL!!!! - Posted by Dan

Posted by Dan on February 27, 2008 at 24:44:56:

I am buying a motel, no money down, $725,000 $5008 mortgage pmnt. 15 yrs. 3% int. Cash flows over $58000 year. (by the way, my credit score is 492, and I have judgements against me from child support as well as for overpaid unemployment benefits). I will be the owner/ operator and live on site. To me, especially since it eliminates a housing cost from my budget, that creates a huge financial surplus to invest in something I have long studied, yet made excuses not to pursue.
NOTES!!!
Well, having convinced myself that it was time to ACT, I thought about what I could initially afford to get into. I figured $5000 was what I have to invest at first by borrowing, selling junk around the house, scrimping, rolling change etc. (there went the old “no money, can’t afford” it excuse).
Next question, where can I find notes in that range? Real estate agents might know. Or own them against their commisions. I called, spoke politely and inteligently, educated, asked if they could ask around the office and get back to me. I didn’t find a single note. But something interesting happened, over the last two days(I made my calls monday morning and it is tuesday evening as I write) three brokers, all owners of their respective offices, have called me back. “how soon can you come teach my agents what they need to do to comply with your system? I can’t wait to get it up and running” was the jist of each conversation. Just these three offices have over forty agents and close over 70 homes per month on average not including land/commercial/multi etc. Now thats potential!!
Let me back up, on my initial call I would get whatever agent picked up the phone. Calls went something like this: I’m Dan,an investor,
HI DAN,
I don’t want to sell you something,
GOOD,
I’m looking for commision notes to buy,
WHATS THAT?
-explanation of notes-
OH, CAN YOU GIVE ME AN EXAMPLE OF A TYPICAL DEAL?
Sure, let’s say you sell a house for 100,000, and you nomally would get a 6% commission. But the buyer doesn’t have the ability to pay that at closing because he put every penny he had down. And the seller won’t because he already feels short of cash for whatever reason. You lose the deal over $6000 no one is willing to bring to the table. Thats where I come in. Before you let this buyer leave the table tell him that if he is willing to up the commission to 7% you will carry a note for it as long as the seller agrees to put it senior to any note he has taken back. The terms of the note will be an easy 8% over 2 years. If everyone agrees I will meet you at closing with cash and pay you the $6000 you had origanally expected for your commision and you will sign over the note to me.
I’LL ASK AROUND IF ANYONE HAS SOMETHING LIKE THAT THEY WANT TO SELL.
Thanks for your time.

And I can picture it now, HEY GUYS, GUESS WHAT THIS GUY WANTED! I COULD CLOSE A LOT MORE DEALS IF HE’D DO THAT FOR ME! WOW, THAT SOUNDS GREAT, I COULD EVEN MARKET MY ABILITY TO HELP WITH CLOSING COSTS!! HEY BOSS, GET THIS!
And then my phone rang. Now here’s my predicament; I have agreed to attend three specially scheduled staff meetings, two will include a free lunch, to share my “system”.
And to think, my best self defeating excuse use to be that I didn’t know where to find notes!!
Sensing things might start to move quickly for me in the near future I have already began looking locally for a partner to loan me money against note “A” which I will hypothecate to him so that he can use it as collateral for a loan to get proceeds to loan me at a 2% spread so that I can buy note “B” and so on.
Wow, a year and a half ago I lived in my car showering at campgrounds after work due to a nasty break up. If I had stopped making excuses back then I might have made some money!!
Get out there and do something. Thanks CRE, especially John, Mike, and Lonnie