Issue VI - March / April, 2004

Money, Cash and Notes

To be successful in real estate, you must have a definite understanding of money and cash; and how notes and real estate interact with both money and cash. The popular belief is that money and cash are the same; and that notes are neither. This is not true. Although it is true that cash and money are often the same, this is not always the circumstance. Successful investors instinctively know what money is and is not, and use this knowledge to increase their wealth. If you do not know the difference, you will not only miss out on wealth building opportunities, but also lose value and growth in your important assets, especially notes. THE NOTE PROFESSOR NOTEBOOK, teaches you several techniques to USE NOTES AS MONEY. More>>

Don't Throw Away Those "Throw Away Seconds"

You bought a property, expertly rehabbed it, and sold it for a nifty profit. However, for one reason or another, your buyer did not qualify for the entire amount of the loan, and you had to take back a small 2nd to make the deal go. A small 2nd behind a large 1st is very hard to sell in the open market. The reason is if the first starts going bad, the risk of having to make the 1st current, or pay it off entirely, outweighs the small reward of a 2nd lien. To add to risk, the payments on these notes are generally below $100, Although this might make good walking around money, it is not worth the risk of being in second position should the 1st lien go bad. These notes are often referred to as "throw away seconds" or "desperation seconds". More>>


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Definition: Recourse
     The right of the holder of a note secured by a mortgage or deed of trust to look personally to the borrower or endorser for payment, not just the property.

When selling a note, always endorse the note "without recourse". When buying using owner financing, try to make the note "non recourse", where the property alone will stand as collateral.

 
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