Note Business Tip of the Month 

April 2010

 

For all new subscribers, Welcome! If you have missed any of Armstrong Capital's E-letters just click here to read our Archived Monthly Email Newsletters!

This year we have added a Question of the month to this regularly scheduled "Tip of The Month" e-letter. If you have a question you would like to see answered in this newsletter just email Jeff!

 

*Tip of the Month: 

       Did you know....

           A note investor's favorite holding period is forever? Never ending passive income is the ultimate goal.
         

*Quote of the Month:

         Obstacles are things a person sees when he takes his eyes off his goal.                                                                                         - E. Joseph Cossman

*Question of the Month:

 

Q - Hi Jeff....  

 

Do you buy, or is there anyone you know, that are interested in buying seasoned Land Contracts?
                                                   - JC
 

A - Hi JC!

The quick answer is yes, as long as the Land Contract is Recordable AND Title Insurable (we can get title insurance on it) then we can purchase land contracts as well. :) Some investor might require that they be converted to a note and deed of trust but that is on a case by case basis.

Jeff

 

*Calculator Problem of the Month:

At the request of many of the subscribers to my monthly email newsletters and tips we will now have a calculator problem every single month for you to solve, using the simplest calculator for the note business the HP 10BII.

 

This month let's try to calculate a full purchase price in it's simplest form on a fully amortized note.

 

Note terms - $130,000 note, amortized for 25 years at 7% interest rate, fully amortized. Verify the payment amount of the note and calculate the full purchase price of the note at a 14% yield:

 

1) First step verify the payment amount. This is what we know

 

    N   = 300

    I/YR = 7

    PV  = -130,000.00

    PMT = ???

    FV  =  0

 

        N     I/YR     PV      PMT     FV

     300     7    -130,000    918.81    0

 

When we have four of the five buckets filled in we can always calculate for the fifth empty bucket and you should have gotten $918.81 as the payment amount. TWITA!

 

2) Next, now that we have amortized the note and verified the payment all we need to do is change one number to get another number. In this case we will change the "I/YR" to the yield requirement of 14% and solve for "PV" which will give us the full purchase price for this note at a 14% yield. Enter 14 in the "I/YR" bucket solve for "PV" now the purchase price of the note (push the "PV" button):

 

       N    I/YR     PV       PMT      FV

    300    14    -76,328.52   918.81      0

 

You should have gotten...   $76,328.52 for the full purchase price

 

Did you get it? The full purchase price of this note in its simplest form would be $76,428.52 if the investors yield requirement was 14%. Great job! More to come next month! TWITA!

 

Jeff's Speaking and Instructing Schedule

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Jeff Armstrong is President of Armstrong Capital. He is a member of the Million-Dollar Club, a Master Broker, visiting instructor for the American Cash Flow Institute, instructor for Nouveau Riche and the author of several best selling industry books. He can be reached by calling 800-845-3055, faxing 818-865-2323, e-mail jeff@armstrongcapital.com, or visit www.armstrongcapital.com and click on "Note Brokers" for answers, articles and information about his Master Broker services and how Armstrong Capital can help you succeed.

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