Note Business Tip of the Month
October 2011
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*Tip of the Month:
Did you know....
The more you can find out about the criteria and interests of a prospective note investor before you send them worksheets, the better for the both of you.
*Quote of the Month:
"A winning effort begins with preparation.
~
Joe Gibbs
*Question of the Month:
Q - Hi Jeff,
I am
doing a deal on 18 houses that are free and clear. I want to finance the deal by
doing private notes on each property. What qualifications (terms, seasoning,
etc.) will result in the smallest discount off the face value? We will be
financing these properties with notes at face value of no more than 80% of
current Fair Market Value, 9% interest, 30 year amortization, 7 year balloon.
-
Thomas K. Sheppard
A
-
Hi Tom!
Thanks for the email! We need to discuss several
things to completely address your question. First, congratulations on being
knowledgeable enough to realize seller financing is a great way to sell your
properties and for your goal of providing quality, affordable homes for 100,000
families by the year 2020. :)
To structure a "good" note on a residential owner-occupied Single Family Home we
currently suggest the following terms:
10% CASH down payment or more
9% interest rate
Amortized for 30 years
Balloon in 7 years
Buyer/Payor credit score of 650+
If a note is structured in that way that will get you top dollar in today's
market (right now that's about 80 cents on the dollar). If anything is different
like a lower credit score, less down payment, lower interest rate, longer or
shorter term or non-owner occupied the discount will be larger and the note will
be worth less.
The other issue I need to address with you is seasoning. With a regular mom and
pop that lived in their home for years and years and years we will consider
buying their note with only 1 month of seasoning. With a rehabber,
fix-n-flipper, real estate investor note where the seller of the property is
buying properties for cheap, fixing them up and then selling them a few months
later we will usually require at least 6 months if not 12 months or more of
seasoning (depending upon the area) before we will consider buying the notes.
The reason for the seasoning requirement is, in short, that a lot of note buyers
that purchased rehabber paper in the past discovered that approximately 7 out of
10 rehabber type notes that they purchased would go into default within the
first 12 months of the note. So with us making the requirement for 12 months of
seasoning we figure that the ones that were most likely going to default have
already done so and the remaining notes will be the better quality notes for us
to purchase.
One last note is that Fair Market Value should be the
value the property is sold for and the value we get back when we order our own
appraisal.
Note holders should understand that the number one
reason that note buyers purchase notes is to receive the monthly cash flow and
NOT to get the property. Hope this helps!
- Jeff
Jeff's Speaking and Instructing Schedule
Location Date Event
(click for info)Newport Beach, CA October 15, 2011 Cash or Cashflow
Sherman Oaks, CA October 29, 2011 Cash or Cashflow
Redondo Beach, CA November 19, 2011 Cash or Cashflow
Los Angeles, CA December 2011 Cash or Cashflow
Las Vegas, NV November 10-13, 2011 NoteWorthy Convention **
Los Angeles, CA Fall 2011 Secrets of Paper
San Antonio, TX Spring 2012 Note Symposium
Contact Jeff today for information about having him Speak to or Teach your group!
** My Topic at the NoteWorthy Convention will be: Push The Partials: If you don’t know how, you must learn now! - With up to 80% of full purchase note transactions being cancelled in today’s market only the note brokers and note buyers that are adept at calculating, negotiating and closing partial purchase options will be able to survive and grow their business. If you are serious about the note business this is a must attend session. Jeff will share with you updated current statistics of the real estate and note markets as well as show you exactly what it means to Push the Partial! TWITA!
What do you plan to do for your note business to close out the year? It seems to me that there has always been a consistent tendency during the last quarter of every year of individuals trying to improve their existing note businesses or trying to get a new note business started. It is similar to the new year's resolution attitude but with the drive to get something done before the end of the year. So this year, for all of you who are on the edge about improving or getting into the Note Business I am offering some pertinent specials for you to grow your note business. The note business is moving forward and things have been improving throughout 2011. We are looking forward to 2012 to be an amazing year in the note business. So get the knowledge and assistance you need to prepare to make 2012 to be your best year ever. TWITA! :)
2011 Fall Specials
NEW Calculator Secrets ~ Regularly $97.00 - Fall Special $77
(Click here to see the Table of Contents, read more about Calculator Secrets and to order!)
"Before I bought your calculator book I was having trouble with anything other than fully amortized notes. Now I am able to calculate all different kinds of notes! The repetition and real worksheets were extremely helpful. Thanks Jeff for another great Note Industry tool!" ~ D. Jarege, CA
"...there is NO WAY I would be able to calculate the numbers for these notes on the worksheet if it wasn't for your calculator book! Out of the 7 note worksheets I submitted, 4 needed calculations I learned in your book! No deals for me if it wasn't for you. If someone is interested in getting in the note business, learning the calculator is STEP ONE! 'Calculator Secrets' showed me what I needed to know about the numbers." ~ L. Eck, CA
Secrets of Paper 101 ~ Regularly $149.00 - Fall Special $100
(A beginners introduction and overview of the Discounted Note Business - includes 4 audio disks)
"Thank you for the very timely and informative introduction to notes. I understand more of what is expected of me and what the true note industry is like.
I am ready to move forward now with your help!" ~ D. Jones, FL
Rainbow Package ~ Regularly $179.00 - Fall Special $125
(Includes Scripts & Tips, Every Single Profitable Note Marketing Idea in the World, Personal Cash Flow Prosperity, Note Holders Handbook)
"Your materials are excellent and very helpful, off the charts as a matter of fact. Your knowledge is like that commercial, "priceless"!!!
Thank you for being you. T.W.I.T.A!" ~ M. Berchard., NJ
Note Business Complete Starter Package ~ Regularly $376.00 - Fall Special $250
(Includes SOP 101 audios PLUS above Rainbow Package AND the Glossary of Note Terms AND the new Calculator Secrets book)
"...As a new broker, I cannot thank you enough for your help and dedication to others in this business. You truly are a MASTER Broker. I appreciate your willingness to answer my questions and teach me. Your guidance and experience are second to none! Thank you for sharing your knowledge, skill and patience.
Without your assistance, my first deal would never have been possible...." ~ D. Suesan, AZ
ORDER NOW!
One on One Mentorship with Jeff Armstrong ~ Regularly $3,995.00 -
Fall Special
$2,100
(Includes
Note Business Complete Starter Package as stated above,
click here to view mentorship
info)
"Jeff Armstrong is a true mentor for Private Mortgage Note consultants. I had
heard about Jeff's' services for Private Mortgage Notes on a conference call. I
contacted him when I was about to send out my first direct mail piece. He
offered great advice from what materials to use to tactics in how to improve my
response rate. Once deals started coming in, Jeff taught me the ropes,
introduced me to funding sources, guided my communications with sellers, and
helped me negotiate the best possible deals for the seller and me. Within three
months from the time I started with Jeff, I have closed 3 deals, earned over
$6500, and have 6 other deals in progress! I directly ascribe it to his guidance
and expertise. It doesn't cost, it pays to learn from a Master!" ~ A. Osmond, WA
"I don't want anyone else to buy your books or get mentored by you! This is awesome!!! Phone is ringing off the hook thanks to you!" ~ L. Eck, CA
Look for new support, assistance and online membership options coming soon!
Follow
Us
Jeff Armstrong is President of Armstrong Capital. He is a member of the Million-Dollar Club, a Master Buyer, 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 818-865-2322, faxing 818-449-4840, e-mail jeff@armstrongcapital.com, or visit www.armstrongcapital.com and click on "Note Brokers" for answers, articles and information about his services and how Armstrong Capital can help you succeed.
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