Whether you are purchasing a note, or creating one when you sell your property, there are certain rules required to make your note valid, as well as marketable. For example, the note MUST have the amount being borrowed, as well as the terms of repayment. The time and place of payments must be included in the note, as well as who is the borrower and who is the lender.

You would think these items are a given, and all notes include them. As I look over several notes a week, I often see notes, written by attorneys, that are vague at best, and completely wrong in the calculations at worst. In my workshop, GET RICH with NOTES: Notes from A-Z, I cover all the general aspects of notes from what a note must contain to be valid, what it must not contain, how to discount notes, to how a how to create notes to sell or keep in today's market.

Remember: No matter if you are borrowing or lending the money, it is your responsibility to make sure your note is correct. After all, it is YOUR note.

Here is a preliminary check list
that can act as a guide when giving, taking back, or purchasing a note.

1. Check date of note (note should be dated as of certain date)
2. Determine identity of maker and payee (compare to names of grantor, beneficiary in deed of trust)
3. Check note amount
4. Determine where payments are made
5. Review payment terms under note
a. principal and interest installments
b. order of application
c. due dates
d. balloon payments, if any
e. late charges
f. default interest Check stated interest rate
g. fixed vs. variable
6. perform usury calculation
7. Check maturity date
8. Check prepayment rights (prepayment premiums, penalties, etc.)
9. Review default provisions
10. Review payee's remedies on default
a. check to see if right of acceleration is provided
11. Check for non-waiver provision
12. Check security given for note
13. Check for attorney's fees provision
14. Check for usury disclaimer and savings provision
15. Check to see whether note is non-recourse

We will go into all of these in more detail, PLUS see real life examples of notes created by a title company attorney that made them virtually worthless in their present condition. It appears nobody went through this checklist. Armed with the knowledge of what notes must contain, you will be able to check your attorney or title company to avoid costly mistakes.

For those purchasing or selling notes, learn how and WHY notes are discounted. By knowing the "number crunching" and the proper way to create notes, you will instantly be able to purchase any note with security of knowing your yield as well as your how to perform your due diligence. For those selling notes, you will have ALL the information needed to purchase your note instantly available, which means you will close the sale in days instead of weeks. The date is April 6th from 8:30 a.m. to 5:00 p.m. Like all of Tom's workshops, this is a hands on event and seating is limited. ACT NOW to assure a seat.

If you know of someone who has a Note they want to convert to cash, remember me. I do pay referral fees.

Tom Henderson
a.k.a. THE NOTE PROFESSOR
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.

Real Estate
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I received an email from one of you inquiring if an internet sales tax would be a good idea. Her thought was that not only would it bring in revenue for capital starving states, it would also "level the playing field" for brick and mortar retail stores, and thereby save jobs. I have to start out by emphasizing that NO TAX SAVES JOBS. Rather than address taxes and jobs in general terms, only a tax as it applies to the internet will be discussed.

The internet sales tax is a perfect example to apply Basiat's "That Which Is Seen and That Which Is Not Seen". (See TAXES icon)

Let's say you have around $100 to spend to purchase a birthday present for a loved one. You find the perfect gift at a brick and motor store that costs $100, but with sales tax, the cost is $105. You then go online and find the exact gift for $100, with no sales tax, but also includes FREE SHIPPING for purchases of $100 or over. You decide to purchase the product from online to save $5. According to "collectivists" economics, by purchasing the product online, you contribute to loss of revenue to the brick and mortar store , as well as "costing " the state $5 in revenue. Moreover, the collectivists will argue that jobs will be lost because of the lost sales at the brick and mortar store. Well, not quite. Let's examine this transaction in a little more detail.

While it is true the brick and mortar retailer lost sales could result in a loss of a job, which is readily seen. What is not seen are the jobs created by purchasing the product from the online store. Since the Post Office's financial problems are in the news, let's examine this transaction from their point of view.

How does the online store get its products to the consumer? The cheapest way is USPS. What is not considered is how many jobs are being supported by online store shipping its product. Not only are postal jobs being supported by internet sales, but also all the collateral job functions that support shipping a product. For example, somebody has to package and label the product for shipping. How about the packaging material and box manufacturers? Are they not supported by your online purchase? The point being that no jobs overall were lost because you purchased online instead of a store. Jobs merely shifted from the brick and mortar store to the online store, and all those supporting the packaging and mailing of products, including the financially troubled Post Office.

What about the $5 you saved by purchasing online. It will be spent somewhere, will it not? Chances are you will spend this $5 at a local merchant. While the $5 does not seem like much, for the individual consumer it still represents funds to apply to other purchases, whether it be a lunch at a local restaurant or some vegetables at the grocery store. By being able to spend this savings in other places, you are contributing to the jobs the brick and mortar stores in your area. Not only are you contributing to jobs in your local area, are you now wealthier because you now possess a wonderful birthday gift PLUS an extra $5 to spend as you please, which also supports jobs. This is not to mention that especially in today's economy, the addition of a sales tax will often prevent a consumer from purchasing a product, period. For example, if you had ONLY $100 to spend, you could not afford the extra $5 in sales tax.

Did the sales tax on online stores save jobs? No! Why? Because government taking money out of your pocket to "level the playing field" dilutes your purchasing power, and transfers wealth and resources to non productive government operations. Remember, governments produce nothing, they only consume.

There are other issues to address in the internet sales tax like the cost of online stores to now determine all the different sales taxes for all the different states, as well as being the tax collector for hundreds of different tax entities. Ah, but Tom, will the online stores not have to hire people to comply with all the government regulations. The answer is "yes", but again, this is what is readily seen. What is not seen is when online store passes on this non productive function by raising their prices. Higher prices means less money in your pocket. By having to pay more, you now have less to purchase at your local merchant.

AXIOM: Hiring people to comply with government regulations is consuming without producing.

There is research that shows states would not benefit that much from online sales and others that "project" the states would bring in "wheel barrels" full of money. I am not going to address whether the states will gather more revenue or even if government takes more of your money is good. Here, I am only addressing the issue will an internet sales tax save jobs by "leveling the playing field". (When you encounter this phrase, you know the politicians are trying to protect some industry or group at your expense) The answer is NO. Taxes of any kind DO NOT SAVE JOBS. When you have less money to spend, jobs are lost. The internet tax is no exception. While the internet tax will benefit the brick and mortar stores, it will be at the expense of online stores, while at the same time leave you with less money to spend.

My theme in most of my recent articles is CONSUMPTION CANNOT EXCEED PRODUCTION. The internet sales tax is a form of consuming without producing; It is that simple.

If you have a question or comment, please CONTACT ME. It is from your feedback that I get many of my topics.

Remember, if you know of someone who has a note to sell, I will pay a referral fee, or split my profits with you

Tom Henderson /a.k.a. THE NOTE PROFESSOR .

Copyright © H&P Capital Investments LLC
All rights reserved