Note Professor Newsletter Pawn Shop Approach
February 2007 Issue 20

Calculator Tool Shop Class
taught by Tom Henderson at DFWREIN
on Tuesday Febraury 13th at 7 PM.
FREE for Note Seminar attendees.
Click here for more information
and registration.

Get Rich with Notes
SEMINAR Dallas Tx   *NEW DATES* February 17 & 18 hp note gra

with Tom Henderson.

After completing this workshop, you will be heads and shoulders above the “wanna be investor”.

Whether you are a wholesaler, rehabber, or you want to buy and hold, you will be able to put deals together, that others would have passed by. This means money in your pocket.

Register early to receive your manual prior to class.


A 2 day event
02/17/2007 Saturday 9am-1pm
02/18/2007 Sunday 1-5pm.
Click here for more Information and Registration

To forward this newsletter to friends or business associates who have an interest in real estate, click the "forward button" at the very bottom of this newsletter
ABC's of Apartment Buying
Seminar Dallas Tx   March 10 and 11 hp apt2
Apartment Buying Made Simple Seminar
with Tom Henderson.

Tom Henderson will be teaching you the basic skills of how to analyze income producing property.The value of income producing property is based on INCOME or CASH FLOW, not comps.

Tom will take the mystery out of how much to pay for apartments. Buying income property can produce fortunes in a very short amount of time. Whether you are looking for cash flow or instant obscene profits, once you understand the basics, you will have the skills necessary to determine which apartments to purchase and which to pass on.

You do not need to spend thousands for expensive boot camps. Tom teaches you the basic concepts and provides you with check lists, where you can instantly know what you will offer for any apartment complex, whether it be a 4-plex or over 100 units.

You will be acting out of knowledge and confidence, not fear. Rather than deals passing you by, you will know which deals to let go by, and which deals to jump on.

Learn what lenders demand to obtain financing. Of course, Tom, will teach creative ways to use notes to acquire and exit property with maximum profits.

A 2 day event
03/10/2007 Saturday 9am- 5pm
03/11/2007 Sunday 1-5pm
Click here for more Information and Registration

To forward this newsletter to friends or business associates who have an interest in real estate, click the "forward button" at the very bottom of this newsletter.
Pawn Shop Approach to Notes
by Tom Henderson   hp pawn sh
The following is an excerpt from THE NOTE PROFESSOR NOTEBOOK. This technique is only one concept that you will learn in my seminar GET RICH WITH NOTES February 17 and 18. You can use the same technique with real estate also!!!!!


As we learned in the Time Value of Money series, long term notes with low interest will receive larger discounts. Sometimes these discounts are not acceptable to the sellers. For example, take a $100,000 note @ 7% over 30 years with payments of $665.30 Let's assume that the going rate for an investor to buy this note was 12%. This note would be discounted to $64,679.60.

Sometimes giving the note holder the option of buying it back at the same price, or maybe for a couple of grand extra within one year, will give seller incentive to sell the note. If the seller exercises the option, you have still achieved your 12% yield, plus a grand or two extra profits. But wait, there is a little more. Remember there were payments made over a year's time, and the seller is paying you the same price you paid a year ago. In essence, you are selling the note for over what you paid for it.

If the note holder does exercise the option, you still have the 12% yield you were wanting. What happens in one year if the seller cannot come up with the entire amount? I would give the seller another option for a year, for a nominal fee, say $500 This will keep the seller happy, give you some spending money and keep the deal going. It should be noted that about 3 months before the option expires, you should be contacting the seller to find out his intentions of exercising his option. After the second year, I would still give the holder another option, but I would start raising the price to $1,500 or so. At some point you want to have this note free from any encumbrances so you can start wheelin' and dealin'.

More often than not, however, the seller has spent his $64,000 and was perfectly happy doing so, and has no intentions of repurchasing a long term note. One other word of caution--be sure to get competent legal help to draft the option so that the transaction cannot be interpreted as a loan. There should be option releases already signed and being held by a title company. This will give some protection if the seller does not exercise the option, or cannot be found to sign release papers.

Of course, you could have done a partial or maybe a split payment, and came out great. You do not know about partials and split payments? Look for those lessons. Partials are great for retirements.

As always, contact you attorney and CPA. Be sure this technique is structured so that Uncle Sugar cannot claim that this was actually a loan in disguise.

Click here for information and registration for

Remember, if you know of someone who has a note to sell, I do pay referral fees. And I have a new Get a Note Quote web page that can be filled out and submitted for an online quote. Check it out.

Tom Henderson /a.k.a. THE NOTE PROFESSOR
Copyright H&P Capital Investments LLC
All rights reserved
Calculator Practice
by Tom Henderson   hp cal
Calculator Practice

I received two questions concerning using a financial calculator. One was a beginner question for calculators in general, and the other was a more advanced question for the HP 10BII. (This is the calculator I use in my classes because of its simplicity and low price)

The first question had to do with how to input interest rates with fractions like 6 7/8% . Easy!! Remember, to convert any fraction to a decimal, you divide the numerator by the denominator. In this case, 7 is the numerator and 8 is the denominator. When you divide 7 by 8, you come up with .875. You then add the 6, and come up with 6.875, which you would enter as your interest rate. 6 7/8% is the same as 6.875%. What would 7 5/8% be in decimals? Did you get 7.625%?

The next question is a little more advanced. It had to do with calculating an IRR (Internal Rate of Return) with the HP 10BII. A layman’s definition of IRR is the return you will receive with uneven and variable cash flows. My student was getting ERROR FUNC message when trying to find the solution to an IRR problem, where the number of times a cash flow repeats itself was 120. This short lesson is not meant to teach how to calculate or apply an IRR, or its proper use, but merely to show where the error was made and how to correct it. When you come upon the same situation, you will know how to input your data immediately.

Here was the situation. My student was being asked to pay $30,000 for a cash flow, which had the following terms. Payments of $166.53 for 120 months. After the 10 years, payments would increase to 429.84 for 5 years (60 months) She wanted to know what her IRR would be if she bought this cash flow, for the asking price of $30,000.

She got her HP 10B II and started inputting data. All went well when she entered -$30,000 for CFj 0. Likewise, all went well when she entered $166.53 for her CFj1. Then trouble jumped up at her. When she tried to enter 120 for the number of times $166.53 occurred, the calculator kept telling her she had sinned against the calculator gods. Finally, she asked me what she was doing wrong.

Although the HP 10BII is inexpensive and simple to use, one of its weaknesses is when trying to solve for an IRR, the HP 10BII can only take in 99 of the same cash flows at one time. But all is not lost. The solution is simple: Simply break up the entry that exceeds 99. In the above example, you can break up the 120 months into two 60 months entries. Simply enter $166.53 for your CFj1, then enter 60 for Nj. You then repeat the entry with $166.53 as your CFj2, with Nj also being 60. This is the same as entering $166.53 for 120 months. You are now ready to enter $429.84 as CFj3, and 60 months for Nj; and then solve for your IRR. (You could have broken the Nj entries into 90 and 30, or 70 and 60, or any combination that would total 120 months)

Without knowing how to calculate an IRR, would you think paying $30,000 to receive the uneven cash flow payments that totaled $45,774.00 in 15 years is a good deal? Many might be fooled into thinking so. But knowing how to calculate the yield, I am sure you would pass on this one, wouldn’t you? Do you think 4.81% is good? This is the return that you would receive on this particular cash flow. Say you wanted to receive a return of 12% for these same series of cash flows. What would you pay? Now we are getting into Net Present Values. I do not have time in this lesson, but look for NPV examples in future newsletters.

If this seemed like it was over your head, I assure you with a little practice, you can be calculating IRR as quickly as you can use a channel remote control. Knowing how to calculate IRR is invaluable if you are projecting returns on income property, as well as notes.

Calculator Tool Shop Class taught by Tom Henderson at DFWREIN
on Tuesday Febraury 13th at 7 PM. FREE for Note Seminar attendees.Click here for more information and registration.

Many have requested that I give an advanced class on the time value of money, advanced note techniques, and advanced calculator use. I am developing such a course now. I should be ready in the summer. If you are interested, please contact me to be put on the mailing list.

Tom Henderson /a.k.a. THE NOTE PROFESSOR
Copyright H&P Capital Investments LLC
All rights reserved
  Prime Rate np
The lowest commercial interest rates banks charge their most credit worthy customers for short term loans.


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