Debbie
09-24-2006, 10:09 PM
Magic Bullets members who are Landlords,
This article caught my eyes which I thought was very interesting. This article was written by Lonnie Scruggs.... This is what he wrote:
Attention landlords!
Here's a simple way how some of you landlords can create extra income from your tenants. What does your tenant do when they want to buy new furniture? Or that 48” TV? Or a new computer? They most likely put it on a charge card or get the store to finance the purchase at 18% to 21% interest. Why don't you offer to finance what they want and collect that interest?
Let's suppose you learn that one of your best tenants wants that latest big screen TV costing $1,000. They won't ever save $1,000, but they can make payments forever. You find out which TV they want, negotiate a 10% discount for a cash sale, and have it delivered to them. (If you can't negotiate a 10% discount for cash, you need a seminar on negotiations).
You charge them $1,000, plus $75 “processing fee” or whatever you want to name it. They pay the $75 processing fee and sign a note for $1,000 payable $50 per month for 24 months. What have you just done? You've just created a little note that will earn you 38%. Let's go over each step.
You negotiate a 10% discount ($100) off the price when you buy the TV. It's not hard to get a 10% discount for a cash purchase. But you do have to ask. Try it! You charge your tenant the retail price of $1,000, plus a $75 processing fee. They sign a note for $1,000, payable $50 monthly (more if you can get it) for 24 months. You now have $825 in a note with a face value of $1,000. What is your yield/return? Try 38%.
Profits from prepayments
Here's a neat way to make a good profit by prepaying part of a loan, a note, or your mortgage. Or any debt that you're paying on. This normally won't work with a bank or a mortgage company, but many times it will with a private note holder.
Let's suppose you bought a $50,000 property from a private party. You paid $5,000 down and the seller carried a note for the $45,000 balance. And let's say that note was structured for 20 years (240 payments), 10% interest, with monthly payments of $434.26.
If you don't ask, you don't get
If you pay each payment as it becomes due, you will have paid $5,211.12 after 12 months (12 x $434.26 = $5,211.12). Try this idea. Include a note with your next payment saying that you've accumulated some extra cash, or you're getting your tax refund, or whatever, and you're trying to decide the best use for it. Then ask your note holder if she would be willing to give you a 15% discount if you could prepay her next 12 payments.
If she accepts your offer, that means you would make her one cash payment now of $4,429.45, instead of 12 payments of $434.26. That's a discount of $781.67 ($5,211.12 minus 15% = $4,429.45). Run the numbers and see if that isn't a 31% return.
This technique will work the same on any type of debt payments you happen to be making, regardless of the size of the payments. Suppose you're making monthly payments of $2,000 to someone. Would this same concept work? You bet it would. In fact, it might work even better.
Someone receiving $2,000 monthly payments would receive over $20,000 cash by giving a 15% discount for 12 payments. That's enough to activate people's greed gland. Or, to buy that new set of wheels.
So make offers to everyone you're making payments to. Where can you invest your money and make 20% to 30% any easier? I once made seven offers like this, (15% discount for next 12 payments) and four were accepted.
This technique does work, but it's up to you to make offers and make it work. But don't expect note holders to make you any such offers. So try it with your next payment! You have nothing to lose, and much to gain.
Never let the mail carrier pass your house without leaving a check. To your wealth, Lonnie
This article caught my eyes which I thought was very interesting. This article was written by Lonnie Scruggs.... This is what he wrote:
Attention landlords!
Here's a simple way how some of you landlords can create extra income from your tenants. What does your tenant do when they want to buy new furniture? Or that 48” TV? Or a new computer? They most likely put it on a charge card or get the store to finance the purchase at 18% to 21% interest. Why don't you offer to finance what they want and collect that interest?
Let's suppose you learn that one of your best tenants wants that latest big screen TV costing $1,000. They won't ever save $1,000, but they can make payments forever. You find out which TV they want, negotiate a 10% discount for a cash sale, and have it delivered to them. (If you can't negotiate a 10% discount for cash, you need a seminar on negotiations).
You charge them $1,000, plus $75 “processing fee” or whatever you want to name it. They pay the $75 processing fee and sign a note for $1,000 payable $50 per month for 24 months. What have you just done? You've just created a little note that will earn you 38%. Let's go over each step.
You negotiate a 10% discount ($100) off the price when you buy the TV. It's not hard to get a 10% discount for a cash purchase. But you do have to ask. Try it! You charge your tenant the retail price of $1,000, plus a $75 processing fee. They sign a note for $1,000, payable $50 monthly (more if you can get it) for 24 months. You now have $825 in a note with a face value of $1,000. What is your yield/return? Try 38%.
Profits from prepayments
Here's a neat way to make a good profit by prepaying part of a loan, a note, or your mortgage. Or any debt that you're paying on. This normally won't work with a bank or a mortgage company, but many times it will with a private note holder.
Let's suppose you bought a $50,000 property from a private party. You paid $5,000 down and the seller carried a note for the $45,000 balance. And let's say that note was structured for 20 years (240 payments), 10% interest, with monthly payments of $434.26.
If you don't ask, you don't get
If you pay each payment as it becomes due, you will have paid $5,211.12 after 12 months (12 x $434.26 = $5,211.12). Try this idea. Include a note with your next payment saying that you've accumulated some extra cash, or you're getting your tax refund, or whatever, and you're trying to decide the best use for it. Then ask your note holder if she would be willing to give you a 15% discount if you could prepay her next 12 payments.
If she accepts your offer, that means you would make her one cash payment now of $4,429.45, instead of 12 payments of $434.26. That's a discount of $781.67 ($5,211.12 minus 15% = $4,429.45). Run the numbers and see if that isn't a 31% return.
This technique will work the same on any type of debt payments you happen to be making, regardless of the size of the payments. Suppose you're making monthly payments of $2,000 to someone. Would this same concept work? You bet it would. In fact, it might work even better.
Someone receiving $2,000 monthly payments would receive over $20,000 cash by giving a 15% discount for 12 payments. That's enough to activate people's greed gland. Or, to buy that new set of wheels.
So make offers to everyone you're making payments to. Where can you invest your money and make 20% to 30% any easier? I once made seven offers like this, (15% discount for next 12 payments) and four were accepted.
This technique does work, but it's up to you to make offers and make it work. But don't expect note holders to make you any such offers. So try it with your next payment! You have nothing to lose, and much to gain.
Never let the mail carrier pass your house without leaving a check. To your wealth, Lonnie