10/18/2006 Chat with Tom Henderson on Buying and Selling Notes [Archive]

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TommyOH

10-09-2006, 03:03 AM

10/18/2006 Chat with Tom Henderson on Buying and Selling Notes
on MagicBullets.com
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): If you made money it does?
[ Private Chat: >>> Burke opens the door, looks around and enters into Private Chat. ]
updateUserList();Burke (http://javascript:insertText('/msg%20Burke%20')): Aloooohaaaaa!
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): It was easy back then...with so many investors now, it's a lil more difficult
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): Aloha Burke!
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Hello burke..
Burke (http://javascript:insertText('/msg%20Burke%20')): I trust all are enjoying this Columbus Day weekend!
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): Just got back from a cook-out/ b-day party for a nephew
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Is this Colombo Day? Does this mean the banks are closed Monday?
Burke (http://javascript:insertText('/msg%20Burke%20')): Don't know about the banks but I am off tomorrow
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): Not too sure, but I think they are closed
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Tommy..why did you not keep your notes instead of selling them...This gets me into trouble with other note buyers when I ask this question
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): well, at the time i was flipping ALOT and wanted the cash to continue, that's all
[ Private Chat: >>> Jeffery_(LCLA) enters Private Chat. ]
updateUserList();Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): Hey, ya'll
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): Hey Jeffery!
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Hello Jeffery
Burke (http://javascript:insertText('/msg%20Burke%20')): Welcome Jeffery
Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): Hey, Tom and Tommy
Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): and Burke and Deb
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Burke and Jeffery...What is it that you would like to learn tonight?
Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): Broadband still have Debietitus. seems to be real bad on weekends. Cable Co. is sending someone out Monday
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): where is Deb anyhow?....
Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): Tom, I would like to learn how to buy notes. Best place to find notes,
Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): and what I should offer for notes.
Burke (http://javascript:insertText('/msg%20Burke%20')): T_Henderson...I want to learn how to make a fortune in notes
Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): I would also like to know how to structure a note to get the best return from selling me note
Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): from selling my note
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Ahhhh....last child finally asleep! Sorry I'm late! Hi Everybody! What'd I miss?
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): lol...wb Deb!
Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): chat's over deb, you missed it all
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Jeff..OK...Burke..I can teach you how to obtain astronomical yields
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): oh darn! G'nite everybody
Burke (http://javascript:insertText('/msg%20Burke%20')): yeah...nice chat all...see ya Deb
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): nuffin yet, we were just discussing what we wanted to learn tonight
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): ooops...lol
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): oh okay! I'll stay!
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Jeff, are you going to be purchasing these notes for your own account?
Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): Tom, yes
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Ok...Now realize for your own account, you should have several million...unless you want to use others money..I am sure this is what you want..right?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Do you guys know how to use a financial calculator...this is very important
Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): I don't have a prob using OPM
[ Private Chat: >>> JM opens the door, looks around and enters into Private Chat. ]
updateUserList();T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Hello JM
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): welcome JM
Burke (http://javascript:insertText('/msg%20Burke%20')): Aloha JM
Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): welcome, JM
[ Private Chat: >>> <ZONG!> JMP beams into Private Chat. ]
updateUserList();Burke (http://javascript:insertText('/msg%20Burke%20')): Aloha JMP
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): welcome JMP
JMP (http://javascript:insertText('/msg%20JMP%20')): hi
Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): hey, JMP
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Somebody opened the gate.
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Hi JM (John Michael?) and JMP!
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): yep, here they come...lol
Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): Yeah, Tom, I'm a leader
Burke (http://javascript:insertText('/msg%20Burke%20')): T....can you give us a little background about you and then maybe talk us through the steps a newbie would go through to break into the note business?
[ Private Chat: >>> ceres opens the door, looks around and enters into Private Chat. ]
updateUserList();Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): hey ceres!
Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): Welcome, ceres
Burke (http://javascript:insertText('/msg%20Burke%20')): Aloha Ceres
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Hi Ceres!
[ Private Chat: <<< JM sneaks quietly out of Private Chat. ]
updateUserList();JMP (http://javascript:insertText('/msg%20JMP%20')): No, JM was me making a mistake and leaving off my last initial, sorry.
ceres (http://javascript:insertText('/msg%20ceres%20')): hello everyone
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): lol...no problem JMP
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): I'm very interested in notes but sure could use that step by step that Burke suggested
ceres (http://javascript:insertText('/msg%20ceres%20')): Shaka Burke
Burke (http://javascript:insertText('/msg%20Burke%20')): Howzit?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): I have been buying, selling, and trading notes since 1980. I teach classes on how to buy notes, determine yields, but more importantly how to use owne financing in buying
Burke (http://javascript:insertText('/msg%20Burke%20')): T...where are you located?
ceres (http://javascript:insertText('/msg%20ceres%20')): thanks for the link burke, I'm doing great
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): och..and selling real estate. If you go to my website, http://www.hpnotes.com (http://www.hpnotes.com/), and look in my newsletter archives, you can get an insight of notes.
JMP (http://javascript:insertText('/msg%20JMP%20')): Cool! I have been wanting to get into notes forever!
Burke (http://javascript:insertText('/msg%20Burke%20')): T....web site not working
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): When you are purchasing a note, you must decide what yield you want, and how much security you want. What yeild are you looking for?
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): It worked fer me....
Burke (http://javascript:insertText('/msg%20Burke%20')): Hmmm....all I get is the code
JMP (http://javascript:insertText('/msg%20JMP%20')): Didn't work for me, it showed HTML source not rendered.

TommyOH

10-09-2006, 03:06 AM

T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Burke..I am having a problem with those who do not have microsoft. My webmaster is working on it.
Burke (http://javascript:insertText('/msg%20Burke%20')): T....ok...I will open with IE
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): What yield do you want?
JMP (http://javascript:insertText('/msg%20JMP%20')): OH! I bet you are using a winderz server and it doesn't do the standard header.
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): as in a rate?
[ Private Chat: >>> Moe walks slowly into Private Chat. ]
updateUserList();Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): welcome Moe
Burke (http://javascript:insertText('/msg%20Burke%20')): Welcome Moe
Burke (http://javascript:insertText('/msg%20Burke%20')): T......The more the better......15-20% sound reasonable?
ceres (http://javascript:insertText('/msg%20ceres%20')): hello moe
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): The rate of the note does not matter,,,what yield do you want...You will discount the note to receive the yield.
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): ahhh
ceres (http://javascript:insertText('/msg%20ceres%20')): like a bond
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): To receive a 15% to 20% yield in todays market will require some tweaking because the discount will be too large.
Burke (http://javascript:insertText('/msg%20Burke%20')): Ok...what is reasonable?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Ceres..Yes...a note is a bond.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Burke..I like to end up with at least 45% to 50%... I will show you how.
Burke (http://javascript:insertText('/msg%20Burke%20')): sits back and is ready to learn
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): This is why I asked if you guys knew how to use a financial calculator....
Burke (http://javascript:insertText('/msg%20Burke%20')): I have used them in the past
ceres (http://javascript:insertText('/msg%20ceres%20')): i have one
Burke (http://javascript:insertText('/msg%20Burke%20')): I think I can dust out those cobwebs and get one to work for me
JMP (http://javascript:insertText('/msg%20JMP%20')): Yep, HP12c
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Ok..I am going to give a real life example from my NOTE PROFESSOR NOTEBOOK. I turned a 7% note into a 75% yield.
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): <<writing down to git one....lol
ceres (http://javascript:insertText('/msg%20ceres%20')): to get you'r yield you have to sell, right?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): I purchased a note with a face value of $10K that paid $116 for 120 months @ 7% for $6k
Burke (http://javascript:insertText('/msg%20Burke%20')): T....where do you find these notes?
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Tom, when you say you purchased, do you mean you paid $10k out of your pocket to buy the note?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): This alone gave me a 20% yield....
Burke (http://javascript:insertText('/msg%20Burke%20')): He paid $6K out of pocket for a $10K face value note
ceres (http://javascript:insertText('/msg%20ceres%20')): so a spread of 4,000?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Deb...Bite your tounge... I try to never pay money out of my pocket...follow me.
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): okay
JMP (http://javascript:insertText('/msg%20JMP%20')):
Burke (http://javascript:insertText('/msg%20Burke%20')): oopps...my bad as well
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): I went to the payor and asked him if he would double his payments, I would cut his interest rate in half
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Why would he do this...because he would cut the number of payments down to 48 instead of 120 and save money..If you have a financial calculator you can follow this
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): can do the same with a regular mortgage, so without a calc i'm not lost...yet
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): This will jump my yield up to 33%...why? Because in the note buying business remember these axioms..SOONER IS BETTER THAN LATER, MORE IS BETTER THAN LESS. I am getting more of my money back sooner.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): tommy..cannot do this with lender mortgages...only owner financing. It is not important at this time to completely understand, as much as it is important to grasp the concepts.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Remember I told you that I did not want to spend my own money?
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): makes sense! Tell us more! (biting my tongue hurts a little)
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): yes!
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): I then went to an in law and offer to sell him half the payments to give him a 12% yield..does that sound good?
ceres (http://javascript:insertText('/msg%20ceres%20')): so would you hold the note all the way to 48months
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Correct...it is 46 months not 48..Yes I would hold..Why not when I am going to get a 75% yield
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Back to my in law...to give him 12% yield, he would pay me $4270 to recieve $116 for 46 months...What did I have invested since it only cost me $6K to buy the note?
Burke (http://javascript:insertText('/msg%20Burke%20')): wonders if this is a trick questions but......$1730?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): I had only $1729 into the note to receive $116 for 46 months...BINGO...I just got a 75.77% yield
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): that leaves $1730.00 but still you didn't pay it out of your pocket?
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): that's sweet!
Burke (http://javascript:insertText('/msg%20Burke%20')): I am hooked....sign me up!!!
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): I'm still lost......don't you still gotta pay $1730 to purchase the $6K note?
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): upfront?
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): for the original 10k note?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Burke..the $1730 is the difference between the $6k I paid for the note, and the $4270 my in law paid me. Deb..In this case I had to come up with $1720, but if I had given my in law only a 10% yield instead of 12, I would have paid almost nothing
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Oh! So you did pay $1730 out of your pocket then! Nothing wrong with that. Still cool paying $1730 instead of full 6k
Burke (http://javascript:insertText('/msg%20Burke%20')): Yes......I got that but I was afraid you were going to come back with a different answer since you earlier said you never use your own money
Burke (http://javascript:insertText('/msg%20Burke%20')): or something along those lines
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Deb...in this particluar situation, I had all the details worked out before I bought the note..There are time when I used my own money to make the intial purchase, only to sell it after I had tweaked it.
ceres (http://javascript:insertText('/msg%20ceres%20')): so out of the deal you would make 4,326
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): gotcha....makes sense to me.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Ceres...When dealing with the time value of money, you look at the yield, not necessarily what you make.
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): i know this is prolly a silly question...but what if you sold the other half of the payments as well?....
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Let me give you an example. Here is a way I teach my renters to make 30% to 65% yields...Say your rent was $1000 a month
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Tommy...let me come back to that
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): k
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): at 1000 a month that is $3000 for 3 months. Say to go to your land lord and offer to pay him $2700 now for three months rents..what would your yield be do you think
ceres (http://javascript:insertText('/msg%20ceres%20')): 10%
[ Private Chat: >>> <ZONG!> Jim_Johnson beams into Private Chat. ]
updateUserList();Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): hey Jim!
Burke (http://javascript:insertText('/msg%20Burke%20')): Welcome Jim
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Hi Jim!
Jim_Johnson (http://javascript:insertText('/msg%20Jim_Johnson%20')): Hello all... time to behave now...
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): With only a 10% discount..you have made 138% yield...Ceres...Do not confuse the discount with the yield
ceres (http://javascript:insertText('/msg%20ceres%20')): hello Jim
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Tom's last statement is:at 1000 a month that is $3000 for 3 months. Say to go to your land lord and offer to pay him $2700 now for three months rents..what would your yield be do you think

TommyOH

10-09-2006, 03:08 AM

T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): This same principle, which I call the perpetual partial, is what I use frequently to get 31% yield regularly...then sell half the payments to jump my yields way up. Here is how this works
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): say someone has a note paying $1000 a month and needs only $10k for one reason or another
[ Private Chat: >>> AIR walks slowly into Private Chat. ]
updateUserList();Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): welcome AIR
Burke (http://javascript:insertText('/msg%20Burke%20')): Welcome AIR
AIR (http://javascript:insertText('/msg%20AIR%20')): hey all!
Jim_Johnson (http://javascript:insertText('/msg%20Jim_Johnson%20')): Hiya Air....
Jim_Johnson (http://javascript:insertText('/msg%20Jim_Johnson%20')): <<--- always answers to all...
AIR (http://javascript:insertText('/msg%20AIR%20')): i didnt get a chance to check what the topic and who was running this chat
Burke (http://javascript:insertText('/msg%20Burke%20')): T_Henderson is teaching us about making money buying and selling notes
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): I offer to pay him 10 months worth for the rights to receive the full year..it is called the 10 for 12 technique...no matter what the payment, the yield is 35%...they always come back next year to do the same
AIR (http://javascript:insertText('/msg%20AIR%20')): could someone give me a quick overview of notes??? sorry
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): How many are completely lost?
Burke (http://javascript:insertText('/msg%20Burke%20')): I am following you
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): hangin in there
Burke (http://javascript:insertText('/msg%20Burke%20')): Air....it is a contract for payments......Say I owe you $10K and agree to pay you $1K a month for 10 months (to keep the math simple, no interest included). You know own a note
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): hanging, I think
Burke (http://javascript:insertText('/msg%20Burke%20')): sorry...that should have been now instead of know
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Air---it'll be archived tonight on the forum...btw, hi Air!
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Burke...note quite. You have a note that pays you $1000 a month. You assign me the payments for 12 months for $10,000. At the end of 12 months the payment go back to you..unless you want to do it again..do you? Would you rather have $10,000 NOW,
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): or a measly $1000 a month for 12 months
Burke (http://javascript:insertText('/msg%20Burke%20')): T..I am completely following you.....I was trying to give AIR a quick explanation of what a note was....in very simplified terms
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Actually, both for me....but I assume that can be done with different notes
[ Private Chat: <<< Jeffery_(LCLA) crawls out of Private Chat. ]
updateUserList();T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Deb...yes..it makes no difference what kind of note it is
JMP (http://javascript:insertText('/msg%20JMP%20')): So, you are playing on the fact that the note holder is greedy and wants 10K now instead of 1K per month, because the better deal is 1K per month for 12 instead of 10K now.
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Tom, if it's not premature, how does it affect tax wise? Unless you want to hold that one off until later in chat?
Jim_Johnson (http://javascript:insertText('/msg%20Jim_Johnson%20')): Tom... wjat program do you track your notes with?
Jim_Johnson (http://javascript:insertText('/msg%20Jim_Johnson%20')): wjat=what
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): JMP..Greedy is not the word..He NEEDS $10K
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): JIM..I use NoteSmith
JMP (http://javascript:insertText('/msg%20JMP%20')): But he could factor the note or use it as collateral at his bank.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Deb...the taxes have to do with the basis of your note. When you give your CPA a amortization sheet, it shows purchasing the note at 10k and the interest is calculated as income.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Yes, you can hypothecate notes...if you have a good relationship with the bank. If you do not, or are using one of the large chains, they do not like it..why..because they are bankers.
Jim_Johnson (http://javascript:insertText('/msg%20Jim_Johnson%20')): Tom... because your buying it at a discount... your basis is then at aprox 60% of the note... which would pass tax ree... and then the rest is earned income?
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): okay.
AIR (http://javascript:insertText('/msg%20AIR%20')): so a note is basically a loan from person to person?
Jim_Johnson (http://javascript:insertText('/msg%20Jim_Johnson%20')): OH.. wait... you have to pay taxes on the value of the note when it is produced ... right?
Jim_Johnson (http://javascript:insertText('/msg%20Jim_Johnson%20')): The basis at least...
JMP (http://javascript:insertText('/msg%20JMP%20')): Wouldn't the interest be unearned income?
Jim_Johnson (http://javascript:insertText('/msg%20Jim_Johnson%20')): interest is ordinary income... just like a paycheck...
JMP (http://javascript:insertText('/msg%20JMP%20')): It is not subject to FICA.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Jim...the interest would be 35%..the amortization schedule would tell you what is "interest income"..it is passive..not subject to FICA
Burke (http://javascript:insertText('/msg%20Burke%20')): Air...yes......or business to business or business to person..............the contract which makes one entity responsible to pay another is the "note"
ceres (http://javascript:insertText('/msg%20ceres%20')): real life deal. i'm advrertising on taxi. 3 taxies he charges 50.00 per month and i stuck a deal at 1,200 for a one lump sum payment
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Air..yes.,. a note is an IOU from one entity to another.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): ceres..yes..go on..I like the way you think
AIR (http://javascript:insertText('/msg%20AIR%20')): and the interest is paid by who?
Burke (http://javascript:insertText('/msg%20Burke%20')): Ceres got a $600/year discount
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Yes..but that is not important as your getting 82% yield
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Can you get that in a CD?
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): I'm going to have to have Jeff to show me how to do those yield calculations....
ceres (http://javascript:insertText('/msg%20ceres%20')): no you get a loss with time value and return in todays market
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): The reason the yield is so high is because of the relationship between the varialbles.. N, Int, PV, PMT, FV...This is why I like small notes
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Ceres...Are you telling me you can get 82% yield in today's market and loose money?
ceres (http://javascript:insertText('/msg%20ceres%20')): i'm talking about cd's
JMP (http://javascript:insertText('/msg%20JMP%20')): How do you evaluate the risk of default?
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): N=note; INT=interest; PV=part value? ; PMT=I don't think I should say this one; FV=fair value ?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): The risk of default is subjective. Does the risk outweigh the rewards
JMP (http://javascript:insertText('/msg%20JMP%20')): Yes, but to make that subjective determination you have to measure the risk not just the reward.
Burke (http://javascript:insertText('/msg%20Burke%20')) (to KaosProperties): N=number of payments, PV = Present Value, PMT = Payment amount, FV = Future Value, INT = Interest rate
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Ahhhh! Thanx Burke!
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Deb..sorry..N=Number of payments INT=interest PV=Present Value PMT= Payment (yes, say it..you are receiving it) FV= Future Value///Burke beat me to it
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): I told you I was a slow typist.
ceres (http://javascript:insertText('/msg%20ceres%20')): you have to watch out for Burke he's quick
Burke (http://javascript:insertText('/msg%20Burke%20')):
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): so with those variables, what is the calculation to get your yeild?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): I suggest you guys get an HP10B II financial calculator. It is under $30 and easy to use.
[ Private Chat: >>> Jeffery_(LCLA) walks slowly into Private Chat. ]
updateUserList();KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Hey! I'm quicker than Burke!
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): wb Jeff
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Tommy..If you know 4 or the 5 varibles, you can calculate for the 5th
Jeffery_(LCLA) (http://javascript:insertText('/msg%20Jeffery_(LCLA)%20')): thanks, tommy.
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Jeff's behind me watching the game---how can you see him, Tommy?
JMP (http://javascript:insertText('/msg%20JMP%20')): Do you ignore risk or is calculating that risk a trade secret?
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): lol
Burke (http://javascript:insertText('/msg%20Burke%20')) (to T_Henderson): I think Jeffery is asking which variable you put where to calculate Ceres yield in example he gave.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): JMP.. No you do not ignore risk..... When purchasing a note, the only real security you have is the collateral. I look at the collateral and say to myself "If I have to foreclose tomorrow, would I want the property at the price I am paying for the note"

TommyOH

10-09-2006, 03:10 AM

ceres (http://javascript:insertText('/msg%20ceres%20')): say there is defalt on a private note, do you not have a opportunity to make a large return on fair market value of the property
JMP (http://javascript:insertText('/msg%20JMP%20')): OK, but if you are in an inferior position you don't just get the property, you also get a debt because of the superior notes and liens.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Ceres...Yes, you have a chance to make a large return, but most of the time the property is going to need work.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): JMP..Right.. 2nds are not marketable. We call them "throw away seconds"...Do you have any? I will tell you a good technique for getting rid of them
ceres (http://javascript:insertText('/msg%20ceres%20')): what about buying notes that have defaults, forclosures that have plenty of room
ceres (http://javascript:insertText('/msg%20ceres%20')): a note with no 2nds
JMP (http://javascript:insertText('/msg%20JMP%20')): So, you look for small value notes in first position only.
JMP (http://javascript:insertText('/msg%20JMP%20')): What is your definition of small?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): ceres...there are far and few in between. I know gurus try to sell you on these, but why would a note holder sell a note that he can foreclose on and make money, or is going to be bought at the court hous.
ceres (http://javascript:insertText('/msg%20ceres%20')): good point
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): JMP...my defintion is $20k and under. If the seconds are right, I will by them ...or a partial of them
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): If you have some of these seconds, why not trade them in at face value on real estate
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): brb
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): hb Deb
ceres (http://javascript:insertText('/msg%20ceres%20')): you mostly deal with notes that have land as a collateral
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): If you guys ever have a problem or want to discuss structuring a note, be sure contact me. Let me give you my email address...tom@hpnotes.com (address...tom@hpnotes.com)
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): I buy "dirt" notes, yes. SFRs are the bread and butter. Most of the paper out there is what I call toilette paper, though.
AIR (http://javascript:insertText('/msg%20AIR%20')): T_Hebderson, where would u reccomend learning the basics of notes?
[ Private Chat: <<< Moe leaves Private Chat. ]
updateUserList();JMP (http://javascript:insertText('/msg%20JMP%20')): What is the max LTV you look for. $20K could be more than the house in some areas.
ceres (http://javascript:insertText('/msg%20ceres%20')): so if I owner finianced a lot mkt value 25,000 I took 3,000 down at 7.5%, what would you buy the note at? no scrub jay
Burke (http://javascript:insertText('/msg%20Burke%20')) (to AIR): He has a educational book on his website at: http://www.hpnotes.com/education.php (http://www.hpnotes.com/education.php)
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): For the basics, I have a workbook called "The Note Professor Notebook"...If you go to my sight you can look at it. For some of the legalities and other aspects, "Owner Will Carry" by my friend Bill Brodbent, and George Rosenburg is also good.
JMP (http://javascript:insertText('/msg%20JMP%20')): Do you look for seasoned or nonseasoned notes? Do you expect different yields since theoretically there are different risks?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): JMP...yes..seasoned notes command a higher price...as well as the credit scores of the payors.
JMP (http://javascript:insertText('/msg%20JMP%20')): So, you do pull the credit profile of the borrowers?
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): I've heard good things about Owner Will Carry.....I think Bill might've visited MB once a while back
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): JMP...You bet your sweet deed of trust I pull the credit scores
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): good question, JMP!
JMP (http://javascript:insertText('/msg%20JMP%20')): Okay, do you have a sliding formula based on FICO?
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Tom, what company do you pull credit?
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Looking at how the person pays the bill is more important than FICO
JMP (http://javascript:insertText('/msg%20JMP%20')): But, he uses scores.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Look in my newsletter archives in oct/03...I wrote a series of articles on "how to structure a note to sell at closing"..this will give insight on note buying
ceres (http://javascript:insertText('/msg%20ceres%20')): in regards to my last question, the credit score would play a big factor and amount of time on the note. how much time is favorable
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): everything is taken in its totally.. I purchased a note where the payor had a 490 score. Paid almost 88%. Why...he put 30% down
AIR (http://javascript:insertText('/msg%20AIR%20')): can you give me an example of when you would use a note?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Air ..what do you mean by "use"
AIR (http://javascript:insertText('/msg%20AIR%20')): okay maybe need?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): I still do not understand
AIR (http://javascript:insertText('/msg%20AIR%20')): yeah me too
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): lol
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Tom...just a tiny bit off topic but in regards to notes...let's say we do owner finance on our rental 2/2/0 SFH. We want to buy 3/2/2 SFH. We sell the note to someone else and be done with the 2/2/0?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): If I understand you..yes...Why not try to trade your note on the 2/2 on the 3/2
ceres (http://javascript:insertText('/msg%20ceres%20')): when you buy a note do you also get a appraisal
ceres (http://javascript:insertText('/msg%20ceres%20')): or bpo
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): ceres...If the note is 6 months or less I get the seller to furnish an appraisal. If more than 6 months a bpo is ok...
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): What if the mortgage still exists during the note...am I assuming correctly that I can pay off the mortgage prior to buying 3/2/2?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): If it is in my city, I will just do my own
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): unless.....I first put the house in LandTrust for estate planning...
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): to avoid DOS clause
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Deb..not sure what you mean
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): okay...I'll explain my question in a moment
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Somebody is going to have to be personally responsible for the note...These land trusts are not all they are made out to be.
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')):lol
Burke (http://javascript:insertText('/msg%20Burke%20')) (to T_Henderson): Where do you find notes to buy?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): No note buyer is going to purchase a note with an underlying 1st. You can believe the gurus that banks are stupid and do not know what is going on, or cannot call a note due, but we note buyers are not going to take that risk
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): We have a mortgage with 50% equity. We want to put the house in LandTrust for privacy issue and to allow us to avoid DOS clause. Of course, we'll still be responsible for the house. We do owner finance on 2/1/0 SFH. Sell note, pay off mortgage then..
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): buy 3/2/2/....make sense?
ceres (http://javascript:insertText('/msg%20ceres%20')): would you also call notes as passive income?
JMP (http://javascript:insertText('/msg%20JMP%20')): Okay, I read the newsletter. You do know that if you use a credit report provided by the borrower you eliminate any possibility of going after them for mortgage fraud if they lied.
JMP (http://javascript:insertText('/msg%20JMP%20')): Do you also get IRS form 4506T signed?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Burke... there is an entire industry around where to find note.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Hang on guys.. everybody is hitting me at once.
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): lol
Burke (http://javascript:insertText('/msg%20Burke%20')) (to T_Henderson): But how does a Newbie get started? I monitored the "Paper Source" forum for a while...is that a good place? Where else?
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): I'll wait my turn
ceres (http://javascript:insertText('/msg%20ceres%20')): sorry
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): as in "Age before Beauty".....
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Deb...no note buyer is going to buy a note from a land trust. You will have to take the property out
ceres (http://javascript:insertText('/msg%20ceres%20')): heee heee
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Not buy from Land Trust....buy from us....LandTrust is to avoid DOS clause during note
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Burke..Yes, the paper source is a good place. Just do not buy the pie in the sky
JMP (http://javascript:insertText('/msg%20JMP%20')): Deb, if you are doing it for privacy you are wasting your time, your names are already in the public record attached to that property forever.
Burke (http://javascript:insertText('/msg%20Burke%20')) (to T_Henderson): Please define pie in the sky

TommyOH

10-09-2006, 03:13 AM

KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): true
JMP (http://javascript:insertText('/msg%20JMP%20')): If you are doing it to void triggering the DOSC clause you are also wasting your time.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Burke..that you are going to make a million dollars in two day. or this is where all the notes are..nobody knows about them..etc.
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Why is that, JMP about wasting time on avoiding DOSC clause?
Burke (http://javascript:insertText('/msg%20Burke%20')) (to T_Henderson): Ahhh...thanks.....no...I am just interested in getting a better return than thru conventional means
JMP (http://javascript:insertText('/msg%20JMP%20')): Deb, because few lenders are calling notes due, even though they could.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): JMP..I was going to say that...Land Trusts are not what they are made out to be. Who says that Land Trusts do not violate DOS?..an attorney or a guru
JMP (http://javascript:insertText('/msg%20JMP%20')): Well, they absolutely do trigger the DOSC, but the misguided theory is that the lender wouldn't know.
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): I received a copy from the gov.com in my state of Illinois
[ Private Chat: <<< Jeffery_(LCLA) sneaks quietly out of Private Chat. ]
updateUserList();JMP (http://javascript:insertText('/msg%20JMP%20')): But, lots of clues pop up when any property changes hands.
JMP (http://javascript:insertText('/msg%20JMP%20')): Like, names on utility bills.
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): not attorney or guru
JMP (http://javascript:insertText('/msg%20JMP%20')): Car registrations.
JMP (http://javascript:insertText('/msg%20JMP%20')): Drivers licenses.
Burke (http://javascript:insertText('/msg%20Burke%20')): I think the DOSC and land trusts are a worthy topic but can we stay on the topic of notes please?
JMP (http://javascript:insertText('/msg%20JMP%20')): etc.
JMP (http://javascript:insertText('/msg%20JMP%20')): Sorry,
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): oh sure! I was still asking involving notes though
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): that just goes back to the statement that banks are in the money business, not the home owning business
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Guys, I am going to have call it a night. Would love to come back. If you would like to learn a little more, from how to us a calculator to how to sell property for less than you paid for it and still make money, My littel manual will help
JMP (http://javascript:insertText('/msg%20JMP%20')): Every $ they hold in REO prevents $10 from being lent to others.
Burke (http://javascript:insertText('/msg%20Burke%20')): Deb....I know...not trying to be rude...just don't want to see us get too far off topic
Jim_Johnson (http://javascript:insertText('/msg%20Jim_Johnson%20')): tom... one last question...
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): np, burke---no problem at all!
Jim_Johnson (http://javascript:insertText('/msg%20Jim_Johnson%20')): do you ever buy or sell personal property notes?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): jim..you have the flow
Jim_Johnson (http://javascript:insertText('/msg%20Jim_Johnson%20')): cars... rvs...etc..
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): mobile homes
ceres (http://javascript:insertText('/msg%20ceres%20')): iou's jk
Burke (http://javascript:insertText('/msg%20Burke%20')) (to T_Henderson): I have a few more questions....can we start a thread on the forum for you to answer?
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Jim...yep..... I also use note to purchase personal property...MHs are a different subject. If they have the land attached they are more saleable.
Jim_Johnson (http://javascript:insertText('/msg%20Jim_Johnson%20')): thanks tom... I will contact you sometime with a notesmath question.... I also use it...
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): Thanks for taking the time to teach and talk with us Tom!
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Burke.. be sure to email me if you have put something on the boards...I will try to make time to answer. I
ceres (http://javascript:insertText('/msg%20ceres%20')): thank you for all the great info. I'm going to squeez you'r brain a bit more on you'r site.
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): Thank you Tom! Same what Ceres and Burke said about pickin' your brain!
JMP (http://javascript:insertText('/msg%20JMP%20')): Thank you.
T_Henderson (http://javascript:insertText('/msg%20T_Henderson%20')): Guys..anytime you have a question, be sure to email me...Got to go. Thanks for inviting me
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): g'nite Tom
Jim_Johnson (http://javascript:insertText('/msg%20Jim_Johnson%20')): Thanks Tom... and thank you debbie for setting this up...
Burke (http://javascript:insertText('/msg%20Burke%20')) (to T_Henderson): Thank you so much for taking the time to share your knowledge with us...I sincerely appreciate it!
Tommy_OH (http://javascript:insertText('/msg%20Tommy_OH%20')): nite Tom
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): no problem Jim.....thanx for joining with us, Jim!
Burke (http://javascript:insertText('/msg%20Burke%20')): Yes Debbie...THANKS!
Jim_Johnson (http://javascript:insertText('/msg%20Jim_Johnson%20')): Debbie works hard at this you all... we all owe her...
KaosProperties (http://javascript:insertText('/msg%20KaosProperties%20')): no you guys do not owe me....no way!

Get the whole chat here in PDF -

Burke

10-09-2006, 03:41 AM

Tom,

Thanks again for taking the time to chat with us tonight. Very much appreciated!

Burke

Debbie

10-09-2006, 04:33 AM

I can't wait to communicate with Tom Henderson again---may it be on the forum or chat or pm....Thank you Tom for your time spent with us!

Tommy---great job on archiving! Now, how about eliminating my embarrassing moment at the end of the chat....?:SM083:

TommyOH

10-10-2006, 02:23 AM

hehe...wellllll....i guess we could edit that out....maybe...

Davis Leeds

10-10-2006, 01:46 PM

Wow, I am sorry I missed that one. I have been buried in catch-up reading. I wedged my way into a year long class from reitactics that starts next week and I have been reading all of the pre-requisite materials required.

From reading here it seems to be all about the yield when looking at notes.

Thanx again!

InvestorJoe

10-11-2006, 12:01 AM

Debbie

10-11-2006, 02:07 AM

Davis, not to take this off topic but if you are serious about kicking your investing up a bunch of notches you will love that class. I took it three years ago and was amazed. If you have any questions send me a PM.

Sending PM is fine.....but....HEY! What about the rest of us? Give us the scoop, Joe! :SM094:

InvestorJoe

10-12-2006, 01:24 AM

Sending PM is fine.....but....HEY! What about the rest of us? Give us the scoop, Joe! :SM094:
REITactics offers a really great but intense year long class. I took it starting in January 2003 and I almost quit after the second month but I am really glad I stuck it out and finished it.

It is intense and Tim covers more ground in one year than I could possibly list here. It doesn't just cover real estate investing like other courses and boot camps it is all comprehensive. It requires two written book reports each week and lots of research and homework. In addition to that more reading is required. There were times when a book every other day was the only way to keep current. Then there were the special projects and planning, planning and more planning.

The class size is limited to 12 and it is a series of weekly recorded lectures, group conference calls, assignments out the wazzoo and an optional get together at a retreat in the North Carolina mountains in the summer. The lectures are not recorded weeks or months in advance, they are timely and answer questions and comments raised by the students on calls, the private board or via email.

When I completed the course I was much better prepared to treat real estate and other investing like the business it is.

A really neat aspect of it is that over the course of the year you are continually building a team to help you succeed. It is painless and you don't really think about it until you are actually doing your first full-scale deal and all of the pieces fall together because you have the right people in the right places.

I can't say enough good about it. It made the difference between me muddling along being comfortable verses exceeding all of my expectations.