H OUSING N EWS R EPORT
April 2016
In addition, since he was a buy-and-hold rehabber, he realized that he could rent the home for at least $700 per month. This income was more than enough to cover his monthly expenses and debt service on the note so the tenant was essentially paying for the property.
They sold 40 payments of their note income to another investor for $15,000. They took the $15,000, paid $8,300 to pay off their loan in full and pocketed the $6,700 difference. That was much better than writing a check. The note investor who bought the 40 payments was happy as she realized a 12 percent annualized passive return on investment. After this investor receives their 40 payments the remaining payments go to the HW Team.
Third Step
At this point, there are two notes on the property. One note “wraps around” the other note. Every month, the HW Team collects $454 on the note they own and pay $237 on the note that they owe. They made it very easy by using a licensed mortgage servicing company. After several months, the original note holder call the HW Team and wanted to be “cashed out.” Now the HW team was under no obligation to do so but once again, a deal architect knows how to work this out.
Conclusion
So how did the HW Team do? Were they better off being deal architects or should they have just taken $8,000 and moved on? These deal architects had a total of $10,000 cash out. They received $21,750 from the sale of the property and the sale of the 40 payments on the note. They will also receive the remaining 75 payments of $454 per month. By combining both real estate and note architecting techniques, they made more than five times what they would have made if they just flipped the property. Our HW Team has evolved from just real estate investors to deal architects.
Fourth Step
They offered to cash out the original note holder, but not at the full-unpaid balance but rather at a discount. The note holder agreed to take $8,300 now rather than getting $237 per month for another 79 months. The note holder simply needed the cash now. Our HW Team could have written a check from their business account and paid it in full but these deal architects are not done being creative yet!
To learn more, please visit www.NoteSchool.com.
Fifth Step
Since 1980, Eddie Speed has dedicated his professional life to the Note buying industry, seller financing and non-performing notes. He’s introduced innovative ideas and strategies that have positively impacted the way the industry operates today. With over 20 years of hands-on experience as an investor, national instructor, coach and author, Kevin Shortle excels at simplifying real estate and small business strategies through real world examples and experiences that will have you on the edge of your seat and eager for more.
Rather than reducing their investment capital by writing a check, they sold something of value. What did they sell? A portion of the payments from the note that they were collecting on!
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