With politicians' bailing everybody out from investment banks to insurance companies, is there any way for real estate investors to get "bailed out" from their plight of not being able to sell their property. The answer is YES, and without government involvement. Why not try selling a partial of your note?

Let's review what we mean when we say "a partial". A partial is where instead of selling or buying the entire note, only a portion of the note is sold or bought. This can be in the form of selling a portion of the remaining payments, such as selling 10 years worth of payments of a 30 year note. Or perhaps buying a partial part of the payments. For example, you are receiving $200 a month for 120 months, and I purchase $100 a month of the $200 monthly. You receive $100 and I receive $100.

All you need to remember is that when we speak of "partials", we are referring to buying only a portion of the note. If you know the concepts and techniques, this can be lucrative, no matter if you are buying or selling notes.

In today's chaotic market it makes more sense than ever to sell a partial of your note. This is especially true if you are an investor who has money in property and just want out. Suppose you bought a property for $30,000. It took you $10,000 to rehab, and you are trying to sell it for $70,000. You have been renting the property out for the past year because you have had trouble selling the property due to tight financing. Now you NEED the money back you put into the property. You have found a buyer, with acceptable credit, but for one reason or another, they cannot get conventional financing. You have a hard money loan that is eating you up like Pac Man, and really just want to get out from under and move on. What can you do?

Why not sell the property for $70,000 with the buyers putting 10% down, and take back a note for $63,000. Remember, the more down, the more money in your pocket. You will then carry a note for $63,000 @ 10% for 30 years. This will make the payments $522.87.

Since you just want out, you determine how many payments you would have to sell to give a Note Buyer a 13 % yield, where you would break even. With your handy dandy, friendly neighborhood financial calculator you determine you can sell approximately 120 payments, or 10 years, and receive $35,000. Combine that with your $7,000 down, and you have more than broken even. At the end of 120 months, the balance of the note of $56,343 will be yours. (If you are wondering how I arrived at the balance, email me for details) At this time you can either sell more payments or keep the note for monthly cash flow. (In THE NOTE PROFESSOR NOTEBOOK) the section Partial to Partials and How To Determine the Balance of a Note, shows how to do the calculations. Yes, I know there are closing costs, I am showing concepts here. In the real world you would determine all costs before selling your note.

When I sell my Notes, I always ask for a partial quote. Often times it just makes more sense to sell a partial of a Note. For example, if you want to know how to acquire NOTES FOR FREE, to put into your retirement fund, go to HAPPY TAILS TO YOU in THE NOTE PROFESSOR NOTEBOOK. This technique is nothing more than another way to utilize partials for big profits. What can be more profitable than having no money into it?

As always, remember there are tax and legal consequences to buying and selling notes. If you do not have a competent tax and legal advisor helping you, you ought to be taken out of the investing gene pool.

If you have a note to sell, or know of someone who wants to sell a note, CONTACT ME Remember, I pay referral fees.

Be sure to contact THE PROFESSOR with questions or comments. This is where I get my topics.

Copyright © H&P Capital Investments LLC All rights reserved

If you have not attended a Note Professor "How To Get Rich with Notes" class, be sure and purchase the Note Professor Note Book manual to enhance your knowledge of creative real estate financing and note buying and selling.

"I got your news letter. It was great, purchased your (Notebook) and it was awesome. I used your renter technique and it worked also. I am getting 41% return thanks to your expert advice. I have spent hundreds and not able to do any thing thru other gurus" Gary W. Garland, TX

"It blew me away what a powerful tool notes can be. Lots of great information, worth every penny! Highly recommended."
Jeff C. The Colony/Investor

"Your manual is short and straight to the point, it's rare to buy something today that gives you your money's worth. Thank you" Stephan B. Phoenix, AZ

You will learn at least one new usable concept to increase your profit in buying or selling notes and real estate.
Tom Henderson, author

By popular demand, THE NOTE PROFESSOR NOTEBOOK is now available in easy, downloadable E- book form for a the low, affordable price of $39.95. Other products are also available, including HOW TO MAKE OBSCENE PROFITS with SMALL MONEY, and GUIDE FOR SECOND LIENS. There is also a FREE download of CHECK LIST FOR OWNER FINANCING. Simply go to the NOTE BUYERS STORE. I can think of nowhere that you can find such information packed products at such incredibly low prices. We are still working out the bugs, so if you have any problems, be sure to contact me.

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"When you see that in order to produce, you need permission from men who produce nothing - when you see that money is flowing to those who deal, not in goods, but in favors - when you see men get richer by graft and pull than by work, and your laws don't protect you against them, but protect them against you - when you see corruption being rewarded and honesty becoming a self-sacrifice - you may know that our society is doomed."
Ayn Rand, Atlas Shrugged 1957

The chaos we are witnessing in the debate of lifting the debt ceiling is but another example where politicians from both sides will address the symptoms of bad economic policy, and not the root cause. The root cause of our dilemma is that for the past century, we have moved further and further away from a free market system in favor of politicians and bureaucrats deciding what and how goods and services are to be produced, as well as how production will be distributed. Collectivist systems are destined to fail, in the theory and in fact. America is not immune.

The Democrats "care" and still want to provide everything to everybody. The Republicans want "smaller government", but want to keep the same economic system we have now. The Republicans seem to be saying, "we can manage the economy better, because we have "good intentions" . What our politicians fail to address are major economic axioms that cannot be overturned by committee, political parties, courts, legislation, by caring or by having good intentions. One of these axioms is consumption cannot exceed production. By definition, collectivist economic systems consume and control production, while producing nothing. Not only in America, but the entire world is experiencing governments consuming more than the ability of producers to produce.

The degree and time a country abandons free market principles and embraces the tenets of collectivism is the degree and time of economic collapse and poverty. America is no different.

We have witnessed slow encroachment on free market principles in favor of control by politicians and bureaucrats. The health care industry is but one example. From government control of medical schools, to the FDA, to government "providing" health care we have seen inexpensive medical treatment available in the 1900's decay into unaffordable, substandard care.

Add to this the economic reality that for any economic system to sustain itself, there must be a price system based on free markets, not a politician's whims or clout. It is the price system that provides the market with the language to determine what and how much of a good or service is to be produced. When politicians start dictating or controlling the price of a good or service, this distorts the language of the price system and gives false signals to the market.

Is there any doubt when mortgage rates were artificially below market value, and politicians from both parties encouraged lenders to lend without proper underwriting, and at the same time a government entity like Fannie Mae purchased these loans, these actions distorted the price system. The price distortion caused real estate prices to artificially rise. The result was the collapse of the real estate market, as well as individual financial firms. Some firms that found favor with politicians were immune to the downturn in the form of bailouts, but this is a different topic.

Neither political party wants to address the wealth redistribution system we have in place in America. We pay farmers not to produce, we pay corporations to invest or not to invest, we finance political groups to operate, we finance other countries, we have price supports or protective tariffs, our government retirement plan is based on redistributing income from the working sector to the non working sector, just to name a few. All of these programs consume without producing. Given the years and extent this wealth redistribution has been in place, is there any doubt we have reached the point where government consumption has exceeded the ability of producers to produce?

The debt ceiling, as well as government spending is a symptom, not the cause of our economic turmoil The cause of our distress is we have accepted collectivism and wealth redistribution as a good system, and not questioned the collectivist economic system we have adopted.

One of my subscribers challenged me that we lived in a collectivist state. There is a litmus test you can perform to determine whether you live in a free market system or a collectivist system. What is the test? Look at what is being debated. When wealth redistribution and collectivism has been deemed moral, the only thing left to do in a democracy is to vote to determine who is to be plundered and who is to receive the plunder. When the debate turns to who is to be taxed and who receives "entitlements", you know the collectivist system has been entrenched.

Look at the ongoing debate on the debt ceiling. Is there a discussion that our economic system does not work. Nope! Are the politicians not debating who is going to be taxed, and who is to receive the tax proceeds. This is evidence we live in a collectivist system.

How do we recover? The first stage to economic recovery is the recognition that a system of collectivism and wealth redistribution is not sustainable, no matter how much "we care" or our "good intentions". From this starting point REAL solutions can formulated. In the final analysis Nature has her own solution. Remember, CONSUMPTION CANNOT EXCEED PRODUCTION.

If you have questions, CONTACT ME. I will address them in future issues.

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