that you will cut his interest rate in half, to 3.5 percent if he can double the amount of each payment. Point out that if he makes payments for ten years, he will have shelled out $13,933.20. If he accepts your generous offer, he will pay off his mortgage in under four years (46 months) and save $3,232.50 —and build up his equity much faster. Why would you do that? Because your financial calculator says that this offer gives you a yield of 33.22 percent. (Caveat: you can get 20.04 percent for ten years or 33.22 percent for four years. Which you choose depends upon your circumstances.) GETWILD & CRAZY Continuing with this $10,000 note, after the payor doubles the payment amount, sell half of each payment to an investor for $4,760.76, giving them six percent yield. You send the investor $116.11 each month for the next 46 months, and you keep the other half. You paid $6,000 for the note and you have $1,239.24 invested. Your financial calculator says (is it broken?) your yield is 110.48 percent. Keep reading Think Realty Magazine for my IRA plan, which stands for Infinite Return Account: No restrictions on contributions, no restrictions on borrowing from it, no restrictions on withdrawals; in fact, no government involvement at all, and your yield can be even higher — as in infinite. I modestly call it “The Greatest Retirement Plan in the World.” •

You can help them find another house. You can pay their moving expenses. You can give them some cash (“cash for keys”). You can buy a non-performing note and deal with all the headaches and costs of foreclosure if you wish, or you can buy it with the intention of making it re- performing. Let’s say the $50,000 note is in default and no payments have been made. The note holder just wants to get rid of it and can’t afford to foreclose or just doesn’t want to deal with it. You buy the note for $10,000

Your yield will be 31.90 percent. Be aware that the half and quarter offers do not work as well on notes with very low interest rates.

and then ask the debtor how much he can afford each month. He says he can pay $250.00. Your financial calculator says that your investment is now yielding 30 percent. (Caveat: there is a lot more to buying non- performing notes than this. When you buy one, you are buying a part-time job. Learn the risks before you try it.)


Why would you buy a note that is in default? Some people do it because they want to foreclose, but that’s not my style. In over 30 years of investing in notes and real estate, I have never foreclosed. I do not want to throw people out of their homes. There are many alternatives. You can lower the payment to what they can afford and extend the term of the note, which retains your return on the note and, if you do it correctly, improves it. You can simply ask them to move.


You can do this with small notes since they are often sold at deep discounts. For example, you find a $10,000 note amortized over 10 years at seven percent with monthly payments of $116.11. You buy it for $6,000. Your yield is 20.04 percent. You can keep it or tell the payor

W. J. Mencarow has invested in notes and real estate for over 35 years and offers a free e-course on notes at


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