Option with Payments (Nothing Down) From Page 28 of THE NOTE PROFESSOR NOTEBOOK

This is a very lucrative method of securing real estate, while giving you time to get your ducks in a row either to get financing or to find a buyer to assign the contract. For example, say you have found a property that is a sleeper. It is a great deal, and you do not want to let it get away, but at the moment, you are in a state of financial embarrassment. You cannot immediately come up with a down payment, nor get financing. All you have to work with is a second lien note where the payor is making payments. What can you offer?

Why not offer to assign the payments of the second lien to the real estate owner for an option over a period of time until you can obtain financing. If you cannot make the deal work, then there would be a time where the option would expire and the payments would revert back to you.

Of course, you could also just make your option in the form of monthly payments directly to the seller, and have the amount you are paying equal the monthly payments you are receiving from the note. In other words, the payments you are making on the option will be the same as the payments you are receiving on the note. This is a form of compensating notes. Be sure to get the option notarized and recorded, or at least a memorandum of an option.

Another slant on this technique is to offer the entire note as an option for a longer period. You would have a problem if the note went bad during your option period. What would you do? You would have to guarantee the note payments should the payor quit paying for some reason. Notice I said guarantee the payments, and not guarantee the note. You would then only have to come up with the payments to keep the option alive should the note go bad. This is a far cry better than having to come up with the entire amount of the note.

For those who are doing the lease option technique, if push comes to shove, you could use this as a technique, but generally, those sellers who would accept a lease option technique are motivated to the point where little option money is needed. However, this still would be a lucrative technique. Instead of giving the seller a couple of grand for the option, merely assign the payments to your existing note, or create a personal note that would match the payments received from your note. This is a cheap way of getting your option.

As always, consult an attorney and CPA. I cannot emphasize this enough. Try this technique, contact the Professor, and tell him how it worked.

CONTACT ME And remember, if you know of someone who has a note to sell, I DO PAY REFERRALS.

Copyright © H&P Capital Investments LLC
All rights reserved
Tom Henderson
a.k.a. THE NOTE PROFESSOR

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."
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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.

This is the number one question I receive from both my subscribers and from individuals I encounter at my speaking events. Although applying economic axioms such as the laws of supply and demand SHOULD give an indication of how to predict future economic events, I remind you that economics EXPLAINS outcomes from circumstances and events, rather than predict the future.

One of my subscribers asked me, "If the laws of supply and demand are valid, why then are many of the economic predictions completely wrong?"

Good question. I think it would be helpful to revisit another economic term which explains the reason economics is better suited to explain why events happens rather than forecast. Remember the Latin phrase ceterus paribus; which means "all things remaining the same". All things remaining the same refers to the fact that other events or actions will influence economic laws. For example, the price of a bottle of water at a grocery store is $1. If that same bottle of water were being sold in a hotel the price might be $2. Why? Because thing are not the same. There are actually two different markets.

Along the same lines, if there were a natural disaster and water were in short supply, you would think the price of the bottle of water would rise because the supply decreased. However, if government enacted anti price gouging laws, the price would remain the same, but would result in a shortage of bottled water. There are natural and artificial ways things do not remain the same.

Let's apply ceterus paribus to some economic events pertaining to real estate. With artificially low interest rates the past several years for mortgages, you would think that since money is so cheap, the housing market would have rebounded robustly. Enter the Dodd Frank regulations that put pressure on banks selling their loans to Fannie Mae to be very selective in their underwriting process because the banks will be forced to buy back any defaulted loans with "underwriting defects". Like us, the banks do not understand the ambiguity of Dodd Frank, and are therefore reluctant to make loans except to those individuals that have large down payments and high credit scores. In other words, with record low interest rates, you would think the demand for housing would rise. However, the over stringent lending requirements and ambiguity of Dodd Frank regulations translates into mortgages being very difficult to obtain.

With the Federal Reserve no longer purchasing Fannie Mae mortgages, you would think that interest rates would immediately rise; "all things remaining the same".

However, things are not the same. The Federal Reserve in all its wisdom chooses to keep rates artificially low to prevent the housing market from completely tanking. This action has resulted in higher end homes flourishing, where the buyers have high credit and large down payment, while at the same time lower and intermediate homes sales are stagnating. When lower priced starter homes stagnate, this stagnation causes a ripple effect resulting in the owners of starter homes not being able to sell their homes to move upwards and thus purchase higher priced homes, and so on.

With the financing of homes becoming more difficult as banks become more cautious, along with the chaotic economy, the Millenniums have decided that renting a home is better than buying. Add to this the fact that younger people are deciding to hold off on getting married and having children. Marriage and family postponement translates into an open field to purchase rental property and apartments, if you can find excellent prices, excellent terms or both. After all is said and done, whether married or not, these people are going to need a place to live. If they are not buying, then renting is the only viable alternative.

So "all things remaining the same", it appears the housing market will remain flat, giving the opportunity to purchase real estate at good prices, and more importantly, utilize seller financing to obtain excellent terms.

But alas, we deal in a political world. What will happen if the powers that be decide to create loans with 3% or less down, allow for below average credit, and then exempt banks from their strict and ambiguous underwriting requirements? Would sales of single family homes not explode? Would this not make buying a home more attractive than renting?

If you believe the real estate market is going to continue its flattening trend, then purchasing rental properties will be very lucrative. At the same time, if you believe banks will start making mortgages easier to obtain, rental properties will be less advantageous.

The point is that creating an investment strategy is very difficult in today's environment because "all things remaining the same" just do not apply when our politicians continually interfere in the market place by deciding everything from the price and quality of mortgages, to how large your toilet seats should be. Make no mistake, when Congress interferes in the market place, whether under the guise of helping the middle class, or providing "free" college, the product of government interference is negative results.

I am teaching my students to purchase real estate at either rock bottom prices using all cash, or purchase with favorable terms and conditions using seller financing. The same applies to apartments and multifamily. With this strategy, no matter what our politicians do, you will still have lucrative options; even if things DO NOT remain the same.

If you have questions or comments, CONTACT ME Tom Henderson /a.k.a. THE NOTE PROFESSOR Remember: If you know of someone who has a note to sell, I DO PAY REFERRAL FEES.

Copyright © H&P Capital Investments LLC
All rights reserved

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