Partials are becoming more and more the vehicle by which note sellers can get lump sum cash, while at the same time giving NOTE BUYERS the security they need in this chaotic economic environment.

A case in point was a note seller who had a blanket mortgage on 5 duplexes totaling over $600,000, and came to me wanting to sell the note. In looking over the package, I discovered the buyer of duplexes put less than 5% down. In other words, the duplex buyer had very little "skin in the game". In today's market condition, the NOTE BUYER did not want to take on the exposure of purchasing this large amount, especially with the duplex buyer putting very little down.

Normally, very little down translates into high risk and therefore a high discount, at best. Add to this, the real estate sale was a "kitchen table" closing, with nothing recorded. To complicate matters further, the note had been modified with incorrect balances, as well as the note was transferred from one entity to another, again with nothing recorded. There was also an underlying blanket mortgage on the duplexes. So in essence, the note seller had a "blanket wrap". This balance would have to be paid off.

This deal was "all tied up in knots", and not marketable in its present condition. Most NOTE BUYERS would just automatically pass on this because it would be complicated.

I decided to investigate further. I found out the buyer of the duplexes had excellent credit, as well as the value of the duplexes was satisfactory.

How do I purchase this note to get the note seller a lump sum cash, and give a NOTE BUYER security needed to purchase a cash flow?

The solution was offering to purchase 6 years' of payments. This solution would not only pay off the underlying lien, but also give the note seller a nice lump sum of cash. By purchasing 6 years' of paymentsl, there was ONLY approx a 12% discount. GREAT!

At the end of six years the note reverts to the seller, with a balance of almost 90% of the original balance, with one tremendous improvement: THERE WILL BE NO UNDERLYING LIEN PAYMENTS TO MAKE. This means the note seller would be able to keep all the payments of the note.

Or perhaps the note seller might want to sell another 6 years of payments in the future. Not bad, huh? Remember, there is no underlying note to payoff, so the cash the note seller will receive will be substantially greater, not to mention that the process would take very little time.

The seller agreed to the offer, and because of knowledge, expertise, and patience, we were able to "untie" all the knots to make the note marketable. The end result was the NOTE BUYER got a good note, along with good security. More importantly, the note seller paid off an underlying lien, (which made the bank a happy camper), and also received a nice lump sum of cash.

The moral to this story is two fold:
1. If you are selling notes, do not overlook partials as a solution.
2. If you have the know how, most "unmarketable notes" can be made marketable.

In today's chaotic market, deals like this are becoming more of the norm.

If you have questions or comments, be sure to CONTACT ME I get the topics for my newsletters from your input.

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."
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.

Definition: Capitalism.

An economic concept of civilization that is based on the private ownership (and control) of the means of production and distribution of goods and services.

Such an institutional situation permits and inevitably encourages the division of labor, economic calculation, capital accumulation, technological improvement and the voluntary social cooperation of a market economy in which mass production is designed for the consumption of the sovereign masses.

Capitalism is the antithesis of statism, socialism, communism, fascism or any other form of collectivism, which are based on government ownership (or control) of the means of production and distribution, and where the state deems itself superior to individual rights.

When applying the true definition of capitalism or free markets, it is easy to see that our present system is not a free market system as politicians would have you believe. Instead we operate under a collectivist economic system based not on market forces, or the laws of supply and demand, but rather at the whims of politicians and bureaucrats.

For example, under a free market system, a government entity like Fannie Mae would not be allowed to exist, much less act in such a manner as to send the housing industry into turmoil. The Federal Reserve System would not exist, which allows even well intentioned people like Greenspan, Bernanke and Yellen to control the supply and price of money, which resulted in artificially low interest rates that triggered this entire economic fiasco.

By the same token in a free market system wealth redistribution programs like price supports, aid to farmers, federal grants for whatever the bureaucrats deems appropriate, aid to dependent dictators, or any other program a politician determines is worthwhile would not even be discussed, much less funded and put into practice.

What we are witnessing today, is not the failure of free markets, but rather we are experiencing the results of almost a century of abandoning free market concepts, and replacing it with the illusion that politicians are actually the producers, and they know better on how to distribute goods and services than we, who produce them.

When undesirable effects which result from government programs, regulations and controls there is always a cry that unfettered capitalism does not work and needs to be regulated and planned by politicians and bureaucrats. Of course, this only leads to more undesired consequences that will require even more regulations.

I was at a gathering where the conversation turned to politics. One person commented that something has to be done because "the economy is not working". Nothing could be further from the truth. The economy is working exactly as the laws of supply and demand and other economic laws have dictated.

For example, when interest rates are set artificially low, corporations borrow money that not only inflates stocks, but also aids in the income gap because affluent individuals tend to purchase stocks, while the less affluent do not.

Regulations and taxes that hinder entrance or advancement in an industry results in more unemployment is another example. Raising the minimum wage above the market price results in less people being employed or the workers hours being cut is still another example.

In other words the economy is working according to the dictates of economic laws. However, many believe if the results of good intended legislation or programs do not produced the desired results, it must be the free market that is at fault, not government interference in the market process.

The point is when you hear how our free market system is not working, just realize that we do not have anywhere near a free market system, as the definition reminds us.

The further we remove ourselves from free market concepts and embrace the principles of collectivism, the deeper and more prolonged this recession is going to be. It is that simple. Does this mean not to invest in real estate or notes? Heavens no. It merely means act be aware of what is happening and act accordingly, but more importantly do not be deceived that we live under a free market system, or that any economy does not work. All economies follow economic laws, not the whims of politicians.

For example, the economic axiom "Consumption Cannot Exceed Production" cannot be overridden by political dictates. When governments consume more than what is being produced and undesirable consequences results, it is politicians, not the free market that is to blame.

If you have a comment or a topic you would like discussed, CONTACT ME It is from your input I get many of my topics.

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

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