Greetings!

The note business is simple - but it is not easy. It is fraught with trouble if you do not know what you are doing. In the note business, rather than owning the property, you have the right to receive monthly payments due under a promissory note signed by the buyer of the property. In essence, you have taken the place of the bank that holds a mortgage on a property. With a note, if the buyer stops making payments, you have the right to take back the property through foreclosure.

Because of the simplicity of the business, a lot of people think they can enter the note business and make a killing. They turn a blind eye to the countless things that can go wrong, and slack off on the most important thing to understand - do your due diligence. Trust, but verify.

Tracy Z. Rewey has written an interesting article for those who are contemplating getting into our business - 21 Tips for Investing in Real Estate Notes. Here is a little taste if you are considering our business:

1. Learn from Others - don't reinvent the wheel. Learn and network with other note investors.

2. Plan to Market - where is the business going to come from? What are the most effective methods to utilize?

3. Know Your Type - What is your risk tolerance? Are you investing with Vegas money or grocery money?

4. First Refer a Deal - Before investing your own funds get some hands on experience. Start by referring a deal to a note buyer, learn and earn a fee.

5. Discover the Why - Get direct with the note holder to find out why the note is being sold.

6. Talk to the Payor - Talk to the person making the payments to find out what is really going on.

7. Verify Everything - Some sellers lie. Sometimes it's on purpose, sometimes it's by omission, and other times they just don't know the facts themselves. Make it a practice to verify everything.

8. Embrace the Boring - Due diligence can seem tedious and mundane. Do it anyway!

9. Plan for the Worse - If the payor stops paying you get to take the property back. Keep your ITV - Investment to Value - at a level that allows you to get out whole at the end of the day.

10. Partials are Your Friend - You don't need to buy all the payments remaining on the note. You can minimize your investment- and your risk - by buying a certain portion of the note.

A personal story. One of the first deals I ever worked on was a note right here in Southern California. The seller told me he sold a "house" and that he got a $100,000 down payment. I asked for no documents. I did no research on the internet or county website. I simply compiled what he told me and presented the information to a very experienced note buyer. He gave me an offer based on my information and the seller accepted my offer to him. The note buyer told me he would do some research and visit the property the next day. I asked to go along and he said sure.

A few hours later the note buyer called me and said "I thought you said the seller sold a house? The property is an old mobile home." He asked me to call the seller and ask for a copy of the note and closing statement. The closing statement showed "0" down payment! I called the seller again and asked why he told me the property was a house when it was actually a mobile home. He said that he uses the word "house" for any kind of property type. When I asked why the closing statement showed no down payment, he paused and said he received the money outside escrow. When I asked if he could provide a bank statement showing he deposited the $100,000, he paused for a longer period of time and said something to the effect that he owed various people money and he paid them in cash.

I told him we could not help!

What a lesson learned. I felt like a fool. To this day, I am guided by Ronald Reagan's wise and simple motto - "Trust but Verify."

To learn more about all of Tracy's 21 Tips, go to www.diversifiedinvestment.com and check out her Newsletter and Articles.

"Your greatest test is when you are able to BLESS SOMEONE ELSE while you are going through YOUR OWN STORM." ..... Unknown.

        Pending Sales Reach a 10 Year High

Americans signed more contracts to buy homes in April for the third straight month, driving pending home sales to the highest level in more than a decade. Pending home sales are up 4.6% from a year earlier.

Sales climbed 11.4% last month in the West, 6.8% in the South and 1.2% in the Northeast. In the Midwest, sales slipped 0.6%.

National Association of Realtors

"80% of all advertising is forgotten within 24 hours. See you tomorrow."......Billboard ad on Interstate 10 outside Palm Springs, California.

Far Fewer Low Credit Score Applicants Than Before the Housing Crisis

Compared with a decade ago, single-family home purchase originations have declined significantly. There were 11.7 million loan applications in 2005, which plunged to 3.6 million in 2011 and rose to 4.6 million in 2014.

Read the whole story at CoreLogic.com, Insights Blog, May 20, 2016.

   Daily Observances for the Month of June

June 1  - Heimlich Maneuver Day

June 2  - National Bubba Day

June 7  - National Chocolate Ice Cream Day

June 11 - Corn on the Cob Day

June 19 - Garfield the Cat Day

June 22 - Stupid Guy Thing Day

June 27 - Decided to be Married Day

June 30 - National Ice Cream Soda Day

Who comes up with this stuff?

Happy Father's Day to you Dad's this June 20.

TheAttleboroZone.com

"We must be willing to let go of the life we have planned, so as to have the life that is waiting for us."

E.M. Forster, English Novelist.

If you enjoyed this Newsletter, tell a friend.

If you know how I can make it better, tell me.

Thanks for reading.

Denny Stanz

CA Broker # 01915404

760-245-5366 

760-245-5367 fax 

dennystanz@verizon.net

www.CaliforniaNoteCompany.com