Note Professor Newsletter

Option with Payments (Nothing Down)

This is a very lucrative method of securing real estate, while giving you time to get your ducks in a row to either secure financing or to find a buyer to assign the contract. For example, say you have found a property that is a sleeper. It is a great deal, and you do not want to let it get away, but at the moment, you are in a state of financial embarrassment. You cannot immediately come up with a down payment, nor obtain financing. All you have to work with is a second lien note where the payor is making payments. What can you offer?

Why not offer to assign the payments to the real estate owner for an option over a period of time until you can obtain financing. If you cannot make the deal work, then there would be a time where the option would expire and the payments would revert back to you.

Of course, you could also just make your option in the form of monthly payments directly to the seller, and have the amount you are paying equal the monthly payments you are receiving from the note. In other words, the payments you are making on the option, will be the same as the payments you are receiving on the note. This is a form of compensating notes. Be sure to get the option notarized and recorded, or at least a memorandum of an option.

Another slant on this technique is to offer the entire note as an option for a longer period of time. You would have a problem if the note went bad during your option period. What would you do? You would have to guarantee the note payments should the payor quit paying for some reason. Notice I said guarantee the payments, and not guarantee the note. You would then only have to come up with the payments to keep the option alive should the note go bad. This is a far cry better than having to come up with the entire amount of the note.

For those who are doing the lease option technique, if push comes to shove, you could use this as a technique, but generally, those sellers who would accept a lease option technique are motivated to the point where little option money is needed. However, this still would be a lucrative technique. Instead of giving the seller a couple of grand for the option, merely assign the payments to your existing note, or create a personal note that would match the payments received from your note. This is a cheap way of getting your option.

As always, consult an attorney and CPA. I cannot emphasize this enough.

Try this technique, contact the Professor, and tell him how it worked.
Copyright © H&P Capital Investments LLC All rights reserved

Did this get your creative juices working? Hope so.

I will be teaching a class on the ABCs of Owner Financing and Notes during March, in conjunction with DFWREIN Education Series. Using notes as options is only one wealth building tactic that I will be teaching. You will also learn how to determine the balance of a loan, how to use wraps, nothing down strategies, and some clauses you always want, or do not want, in your real estate contracts and notes. My class will be held on three Wednesdays beginning March 15th. The time will be from 7:00 PM to 9:00 PM. The price will include THE NOTE PROFESSOR NOTEBOOK. Go to www.DFWREIN.com or call Mayra@ 972.671.7346. You will need a FINANCIAL CALCULATOR. I will be teaching from the HP 10Bii. These are around $30 and simple to use. BE SURE TO REGISTER EARLY because SEATING IS LIMITED.

FOR UNDER $200 YOU WILL GET THE SAME INFORMATION COSTING THOUSANDS!!!!

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