H & P Capital Investments LLC
In conjunction with TEXRIC and Longergan Law Firm,
Tom will team up with Gaylene Lonergan to teach
owner financing and notes from an investor's point of
view, as well as from a legal perspective. Because of
the in depth subject matter, the workshop will be
broken down into 6 half day sessions on Saturdays
from 1:00 p.m. to 5:00 p.m. The topics will range from
how to structure notes to buy and sell real estate, to
how to use notes for nothing down deals, to how to
obtain 75% yields and higher (safely), to the legalities
and procedures of foreclosing and how Texas Law
applies to owner financing. The price will be $49 for
each session, or $199 if you purchase all sessions.
Like all Tom's classes, enrollment is limited to 20
participants to encourage questions and interaction.
As of this writing there were only 6 seats left.
Go to TEXRIC to register.
Or contact me
any questions. You will need to be familiar with a
financial calculator. I will be teaching from the HP 10B
II because of its simplicity and low cost.
< font color="#333333" face="Arial,Helvetica,sans-serif" size="2" style="font-family:Arial,Helvetica,sans-serif;font-size:10pt;font-style:normal;font-weight:normal;color:#333333;">Forward to
Another Note Myth
Do not be lured into thinking because you are
charging a high interest rate or you discounted a note
to obtain an astronomical yield, this is the yield you
In my owner financing
emphasize over and over again that your "yield" is not
realized until the note is paid off. (BTW, you do not
need to discount notes heavily to enjoy
"Obscene Yields" with little risk or money. With
discuss another common owner financing or note
buying myth: IF YOU HAVE TO FORECLOSE, YOU
WILL RECEIVE THE PROPERTY BACK IN THE
PRISTINE CONDITION IN WHICH YOU SOLD IT.
I am going over this myth again because a common
theme I am hearing from note holders is "If I have to
foreclose, I will "simply" take the property back".
is the fallacy in this logic? What is not taken into
consideration are the cost of foreclosing, holding
costs, and closing costs when you sell the property.
This is not to mention if your payors file bankruptcy,
which will further delay your getting the property back.
More importantly, repairs and maintenance cost are
I have read the average
has to be taken back will have $12,000 in repairs
before the house is "market ready". This is assuming
there is only normal wear and tear, and no vandalism
has taken place. (How many of you landlords have
horror stories of tenants moving out leaving your
property in shambles, or vandals have come in a
gutted your property of everything from plumbing to
Last, but not least, few consider in
economy, the value of their house has declined.
Along the same lines, how long will your house
remain on the market, and who will buy your property
is an important factor, whether you are purchasing a
note, or selling a property using owner financing.
Let's look at a typical example. You purchased a
$100,000 note for $81,000 to receive a 10% yield, or
perhaps you merely sold your house and took back a
$100,000 note. It is the concept that I am trying to
convey. Assume further the value of your house has
declined to $85,000 ARV, and needs $12,000 worth of
repairs to make the property marketable. You have
also acquired a couple of thousand dollars in holding
costs, and vandals are entering your property at night
to sleep, party or steal your newly installed carpet,
wiring and plumbing. What is your yield? Not good, is
I hope I have pointed out two major note myths.
you have to foreclose, you will receive the property
back in pristine condition, and immediately find the
perfect buyer without spending a dime.
determined by the interest rate your set, or the price of
the note, not by the conditions of the final payout. Both
of these statements are false. Do not fall into the trap
of believing them.
The moral of this article is no matter if you are taking
back a note, selling a note, or buying a note, take all
factors into consideration before assuming, "If the
payors quit paying, I will SIMPLY take the property
back". There is nothing simple about it. Are there
ways to minimize these risks? YES. But solutions are
too lengthy to go into in a brief newsletter forum.
I will be discussing this and other investment
strategies in my April workshop.
If you have questions
will be happy to discuss your specifics.
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Note Professor NoteBook
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knowledge of creative real estate
financing and note buying and selling.
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"Your manual is short and straight to the point, it's
rare to buy something today that gives you your
money's worth. Thank you" Stephan B. Phoenix,
You will learn at least one new usable concept to
increase your profit in buying or selling notes and
By popular demand, THE NOTE PROFESSOR
NOTEBOOK is now available in easy,
book form for a the low, affordable price of
Other products are also available, including HOW TO
MAKE OBSCENE PROFITS with SMALL MONEY, and
GUIDE FOR SECOND LIENS. There is also a FREE
download of CHECK LIST FOR OWNER FINANCING.
Simply go to the NOTE
BUYERS STORE. I can think of nowhere that you
can find such information packed products at such
incredibly low prices.
We are still working out the bugs, so if you have any
problems, be sure to contact me.
Tom's ECONOMIC OBSERVATION
So much has happened since my last issue, and I
have gotten so many questions, it is hard to know
where to begin. Let's suffice it to say that I have never
seen so many economic fallacies and outright
falsehoods than what has been thrown at us in the
past two weeks. None of what these "geniuses" are
doing is based on sound economic principles. If you
get nothing out of this issue, please realize this
truism. WE DO NOT HAVE A FREE MARKET
ECONOMY, and REPUBLICANS ARE NOT FREE
You can always tell
is either being intentionally deceptive or is completely
ignorant of economic principles when you hear
statements like "I believe in free markets, but_____ "
or "We must regulate when free markets are
not "working". With this being said, let's look at the
two most recent fiascoes being perpetrated on us in
the name of "If we do not act BOLDLY and quickly, we
are in danger of_____ "
The first fiasco is the Federal Reserve announcing
they are to purchase $300 BILLION in long term
Treasuries. The question you need to ask is "Where
do they get the money"? I have heard, "from the tax
payers" or " they will borrow it". It is worse than both of
these. The Federal Reserve will merely create money
out of thin air. No longer do they even have to bother
with printing the money, they can now create money by
a computer entry. What will be the result of the Feds
action? INFLATION. This is an economic reality with
no exceptions. They are only fueling the fire for a future
crisis. (Ask yourself if a free market economy would
money under the control of politicians and
Then comes the brainstorm of our Secretary of
Treasury. Under the guise of a partnership of private
investors and government, they are going to buy up
these "toxic" loans. Here is the farce, I mean "plan".
you have a toxic loan of $100. The private investor will
put up $7 and the government, WITH YOUR MONEY,
will put up another $7, and the government will then
loan the private investors $86 to purchase the rest of
the toxic loan. (Notice how they used $100 as an
example, and not several hundred billion) What we
are not told is the $100 toxic note would sell
market for only $50, at best. So the banks will seem to
get "bailed out" with no loss to them.
The next logical question would be "Where does the
$86 to loan to the private investor come from, and
the terms of the loan?" I have yet to get an answer. If
you find out, please let me know. I know if I were the
investor, I would not borrow $86 on an asset worth
$50. Would you? I would imagine the $86 loan would
have to be "modified" when it is determined the toxic
notes are worth only $50. If this is the case, the
would loose nothing, the private investor would still
hefty profit and YOU AND I WOULD BE FOOTING THE
BILL for this charade.
Here is a fact that is
intentionally being omitted. When there is a loan of
that is now worth only $50, somebody is going to have
to absorb the loss. It appears it is not going to be
those responsible, neither Congress nor the lending
institutions. Is this a free market system?
Ask yourself another question, "Would Fannie Mae
even exist in a free market economy?" We are
witnessing not the breakdown of free markets, but
rather the results when regulations and political
motives replaced the principles of free markets.
Remember, "FREE" markets means free from the
interference from politicians and bureaucrats. F.A.
Hayek described our current situation perfectly in "The
Road to Serfdom". Hayek points out that even with the
best intentions, when politicians try to interfere with
free markets, there will be unintended consequences,
which will result in more rules and regulations to
combat the bad effects of prior regulations. This
process will repeat itself until a free market economy
decays into the tyranny of a controlled economy.
The classic economic essay, "I, Pencil" by Leonard
Read, explains in a simplistic analogy how
impossible it would be for someone to manage the
production of a simple pencil, much less try to
an entire economy.
If you have questions, Contact
Me. It is
from your letters and comments that I get many of my
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All rights reserved