Joann Pace

Saturday, November 25, 2017

Starting Out on Your Own With a Cash Flow Note Listing

No matter if you are considering an online business or analyzing a cash flow note listing, there are several considerations to think about before you start working for yourself. Are you sure that this is what you want to do? Would you quit your full-time job to be successful at it? Unless you have all the information you need to make a decision like this, it is essential to take some time to look at all your options.

Before diving into the cash flow note business, it is a good idea to learn more about the actual process to save yourself from major mishaps that can easily avoid. The best thing to do is conduct some individual research while you to talk to someone experienced at dealing with cash flow note listings. A mentor can help give you useful advice while answering your questions. Anyone that may be hesitant about cash flow note listing should seek out information from someone successful in the business already.

Once you have made a decision to move forward with cash flow note listing, start planning and training. Even if you have to pay to get training materials, you will benefit from professional information in the long run.

A great place to obtain information about a cash flow note listing is Russ Dalbey’s Winning in the Cash Flow Business website. Russ Dalbey has created a proven cash flow note winning system and the website can lead you to more information and materials that will help you.

Real Estate Notes and Land Contracts Offer Positive Cash Flow to Investors

Real estate notes and land contracts are used to document the sale of houses, commercial properties and vacant land. Other common names for these contacts include real estate receivables and seller carry back trust deeds. Seller carry back returns to a type of private financing where the seller acts as a lender. Realty note holders can elect to provide full or partial funding to expedite the sale.

Although real estate notes and land contracts can be executed by the parties involved, it is best to retain legal counsel to ensure documents are legally-binding. At minimum, have a lawyer review contracts and make sure they include legalese which protects both buyer and seller in the event of default.

Note receivables are valuable assets that can be sold to private investors. When drafting contracts is it important to be aware of strategies which can maximize cash flow and return on investment.

Sellers who provide private financing to help buyers purchase the property or obtain financing for the balance of the sale price should obtain a minimum 10-percent down payment for residential properties, and 20 to 30-percent for commercial properties. In most cases, obtaining higher down payments can potentially minimize the risks because buyers do not want to lose their investment money.

Seller carry back financing typically extends for two to five years and up to seven years on commercial properties. It is best to keep seller carry back terms as short as possible. At the end of the term, buyers must obtain funding through a conventional mortgage lender.

Oftentimes, buyers who require seller carry back financing are credit-challenged, so it is critical to obtain a current credit report. Individuals with low FICO scores are not always high risk, but sellers must protect realty assets through iron-clad real estate notes and land contracts.

When entering into seller carry back mortgages it is best to work with buyers…

Medium Term Notes – Investing in Short Term Medium Notes

There are a wide variety of different investment vehicles out there that can benefit individual investors and companies alike. Choosing the right investment vehicle means doing some research and getting to know your options, deciding which options are best going to meet your needs, and then investing intelligently in those investment vehicles to improve your portfolio or financial future. Investing wisely and with research and due diligence is essential to your success in the marketplace. One of the options that are available to you is medium term notes, so make sure that you consider this option as part of your investment portfolio.

A medium term note, which is also commonly referred to as an MTN, is a note that typically matures within a period of five years to ten years, although other maturities are also available. MTN are also corporate notes that are continuously offered by companies to different investments by way of a dealer. These investors can typically choose between several different maturities options, usually ranging from as few as nine months to as many as 30 years. Although these notes are available in the 30-year maturities, this is not a common option, as shorter term notes are more common.

When investors know that a note is a MTN, this gives them a basic idea of what the security is going to be when they are comparing the price of that note to other types of fixed income securities. When all else is equal, then the corporate rate on the MTN is typically going to be higher in comparison than the coupon rates that are achieved with shorter term ones. Short term medium notes are the MTN that have the shortest terms, such as nine month long notes rather than the 30 year notes.

This is a type of debt program that companies are generally going to want to use so that they will be able to have consistent cash flows coming in to the business, often on a weekly basis, from debt issuance. These…

Promissory Note or Contract – What’s the Difference?

Promissory Notes are Different from Contracts

Avoid Confusion-Understand the Difference

Contracts

A contract requires two parties to agree to its terms. The parties must exchange “consideration” (something of value) that binds both of them to perform a duty. Example: I pay you rent in exchange for you making an apartment available to me for living space. A contract needs to have bilateral or mutual consideration. This means both parties have to give something of value to each other in order for a contract to be valid.

Promissory Notes

Promissory notes are a special type of legal document. They are a created by statute (e.g., The Uniform Commercial Code). A note contains a promise to pay a fixed amount of money at a set time. There is no mutual or bilateral exchange of “consideration”. Promissory notes can work in conjunction with other documentation such as mortgages and security agreements which detail additional aspects of the underlying transaction. Example: When used in a real estate transaction, the promissory note covers the promise to repay the amount owed, interest, and maturity date – while the deed of trust or mortgage outlines the other responsibilities of the parties involved more precisely.

Key Terms

Two key legal terms used in the note are “promissor” and “promisee”. A promissor is a person who makes a promise to repay the money; the promisee is the person to whom the promise is made. The promisee is entitled to receive payment from the promissory.

Some notes are drafted that call the individual who promises to pay is the “maker or the borrower”, and the person to whom payment is promised is called the “payee or the holder or the lender”.

Because of these multiple identity options be certain to understand exactly who is to do what when investing in or transacting a note situation.

Promissory Note Basics

Promissory notes are negotiable instruments like checks: a promise by one person (or company) to pay another. They are…

Investing $20 Dollars – Can You Double It In a Week?

$20 dollars may not sound like much but it could potentially become one million dollars in a very short amount of time. In the world of investment and compounding, even a humble $20 bill can be a seed capital account that will grow to gigantic proportions. When your money earns interest upon interest, you can see some really magical things starting to happen.

Speed of return is just as important. Lets take our $20 bill for example, can you think of ways to turn that $20 into $40? If you could double your result every time for 17 times, you would have over $1.3 million dollars by the time you are at your 17th transaction.

Have you thought about how to double your $20 dollars? It would actually be remarkably easy and I don’t think there would be a reader considering this, that wouldn’t have a few ideas about how to double a $20 dollar note into $40. But how would you double $650,000 which is the 16th transaction or step?

If you were able to double $20 by investing it. In other words, buying something for $20 and getting back $40 when you re-sell it, then you can do it at higher levels too. The main difference will be the speed of your returns. To double $20 would not only be easy, but it wouldn’t take long. Maybe you could even find an opportunity and sell it within a day. If you had to double $650,000 you would need to find something like a house or a business and that takes time to buy and time to sell, but you could still do it. Also, you couldn’t possibly make 100% in a single transaction in real estate, maybe at a stretch you could do 3 by 30% transactions. But it is do-able.

A Promissory Note Catastrophe

The story:

A real estate developer in 2005 optioned five older, contiguous beach front hotels in Florida. He planned to redevelop the combined sites into one large, magnificent luxury hotel. In late 2007 he obtained a $ 35 million loan from an east coast Real Estate Investment Trust (REIT) that was secured by a first position mortgage on the five older hotels and their land. He used the borrowed funds to purchase the five hotels. A prominent Florida attorney closed the loan and purchase transaction. During 2007 and 2008 the developer worked on obtaining architectural drawings, land use permits, building permits, and engaging contractors.

The sequence of events:

By mid 2008, the real estate market nationally, and in Florida particularly, had crashed; property values had declined approximately 35% and were continuing to drop. Bank lending had been discharged-up. A hurricane had stuck the Florida coast and destroyed the five old frame hotels. The, to add to the misery, the developer declared bankruptcy due to the failure of the subject project and other projects in his portfolio.

The REIT lender was holding a $ 35 million promissory note that was in default, the borrower had declared bankruptcy, and the hurricane had destroyed the hotels on the collateral property. As the lender was preparing to start foreclosure proceedings it discovered the Florida attorney that closed the loan and purchase transaction had failed to obtain an assignment of the hazard insurance policies on the five hotels. The ownership of the wind damage insurance claim of $ 20 million was in dispute. An errors and omissions insurance claim against the closing law firm’s carrier issued.

The Promissory Note Questions:

The REIT needed to determine its damages. The question was what was the pre-2008 Fair Market Value of the $ 35 million note, and what is the post-2008 FMV? What amount of value has the promissory note lost? How do…

Three Rookie Mistakes of Bulk REO Investing

Mistake 1

Not Recognizing “Daisy Chains”

Unfortunately in this business you will encounter a collection of never ending daisy chains of “brokers” and self proclaimed “mandates” consistently misrepresenting a product that they do not control nor have the proper authorization to advertise or sell.

Only through training and experience will you be able to recognize these clowns of the business within 2 minutes of being on the phone with them. You will learn early on that it is not about finding the deals, but learning how to spot these clowns and get off the call as fast as possible.

These people who obviously have nothing else better to do will be your downfall if you do not learn early how to get pass them and on to the real product source, which is the most difficult point to locate.

Mistake 2

Not Performing Due Diligence

Any time you are investing you need to run a thorough due diligence to make sure the numbers make sense.

This is the main cause of failed stories about investing in this industry. The slightest mistake can empty your pockets in the blink of an eye; This is why mentorship and training prior to investing is crucial in this business.

Hire local Realtors to run your BPO (broker price opinion) and establish real market value with updated figures for today’s Real Estate market.

A lot of newly formed hedge funds find themselves guilty of this cruelious mistake. They let ruthless sharks that have been around for a while talk them into buying a tape which is either full of garbage assets or over price.

Mistake 3

Not “Cherry Picking”

This has to do more with being affiliated with a real source or company that will give you access to their product and then cherry pick from their lists or properties.

Instead of waiting for that “home run” of 100 properties, you can work on those “one base hits” by cherry picking one property at time from a tape. Rehabing and selling these one at time…