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 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 me http://www.hpnotes.com/contactus.php , and tell me how it worked.

Remember, if you know of someone who has a note to sell, I do pay referral fees and this has been very beneficial.

To forward this email to friends or business associates who have an interest in time value of money, click the "Forward this newsletter" on the front page. Tom Henderson /a.k.a. THE NOTE PROFESSOR .

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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.

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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.
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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.

One of my favorite subscribers sent me a link concerning White Castle's response to New York's increasing the minimum wage to $15.

Let's examine the minimum wage from an economic standpoint. Remember, the laws of supply and demand do exist and affect all goods and services. Low skilled jobs are no exception. If the price of a minimum skill/minimum wage job is arbitrarily and substantially increased above market value, the demand decreases.

With this in mind, let's examine a quote from Jamie Richardson, vice president of White Castle on New York's increasing the minimum wage:

"But Cuomo's idea of "economic justice" is a long way from the dollars-and-cents reality of running a burger business. If labor costs rise dramatically, White Castle will have to balance its books by raising prices or changing its business model so that it needs less labor."

This is the reality of all small businesses when the cost of labor is artificially raised. Since the fast food industry works on a very low profit margin, and very sensitive to price increases, do you think prices are going to be raised or a model of less labor will be the outcome?

The past has shown that the model of "needing less labor" has long been the choice of various industries. A few examples; no longer do we have full service gas stations. Why, because the consumer has chosen to pump his/her on gas rather than paying a higher price to have someone else do it at an inflated labor price, not to mention health insurance, unemployment tax or Social Security tax.

Likewise, ATMs are taking the place of tellers, and self-service check outs at grocery stores are becoming more visible, and even check in at the airport is being transacted by a machine rather than a human. Do we think businesses like White Castle will not examine the benefits of automation, as opposed to the overpriced cost of unskilled labor? Can a customer sitting at a booth not be able to push a button to order just as well as an employee?

Those who favor a minimum wage will tout that raising the minimum wage has not resulted in massive increase of unemployment. This is partially true, but not for the reason the proponents desire.

For example, while an automated Kiosk machine will displace one worker due to the high cost of labor, it might take three extra employees to program, install and maintain the machine. However, all these functions require skilled labor, not unskilled. While the overall unemployment rate did not decline because three skill workers were hired, it was at the expense of the unskilled worker.

In other words, the unemployment rate of unskilled labor's rise will be hidden, while the overall unemployment rate might remain steady or even decline. Along the same lines, because of the minimum wage, as well as other factors of hiring unskilled labor, such as Social Security, unemployment insurance and now heath care, the demand for unskilled labor has been declining little by little for several decades. The decline in the demand for unskilled labor over the years because of the rising costs is a major factor why teenage black unemployment reached 41%.

Richardson goes on to give a warning of the effects of the rise in the minimum wage: "Candidly, this could create a whole generation of kids who won't get their first job".

Unfortunately, with youth unemployment rates of 41%, it appears in many areas there is already a generation of young, unskilled workers who have gradually been priced out of the market.

It should be noted that the rise of the cost of unskilled labor has to date been gradual. New York's increase from $9 to $15 an hour is not a gradual increase, but rather substantial. We are now back to our original question: When the cost of unskilled labor artificially rises, what happens to demand? It decreases, of course.

Summary: While legislators believe that enacting laws with "good intentions" is all that is necessary to have a desirable outcome, they completely ignore the effects of laws of supply and demand.

The minimum wage is an excellent case in point. Artificially increasing the price of unskilled labor will necessarily result in a decrease in demand.

Another way of explaining the effects of increasing the minimum wage is the axiom: Price Controls Above and Below Market Value Will Result in Shortages.

In the case of the minimum wage, the shortage will be in jobs for unskilled labor by businesses either cutting back on hours or elimination of jobs as well as the substitution of machines and Kiosks for unskilled labor.

With the substantial increase of the minimum wage in New York, do not be surprised if in the future we will find in White Castle, as well as other restaurants, we will be pushing buttons to make our orders instead of talking to an unskilled worker who is moving his/her way up the ladder.

Like most legislation that interferes with the laws of supply and demand, the group the politicians try to protect is the group hurt the most. The minimum wage is a case in point.

If you have questions or comments, CONTACT ME Tom Henderson /a.k.a. THE NOTE PROFESSOR. It is from your comments that I receive many of my topics.

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