Paper Profit$ New$Line Sample Newsletter

Helping People Meet Their Financial Goals
Volume 7, Issue 4
Copyright 2000 by Diversified Resources, Inc, all rights reserved

One of our affiliates called me up, wanting to buy his new family a home. Because of the sensitive nature of what we're talking about, though I'll use real figures, I won't use his name. But, well, you know... the usual... Bad credit from a recent divorce (it was all her fault, of course, just like usual)... Self-employed... Could afford the monthly payment, but not the down payment.

Of course, it was a no brainer for me... "Make your offer contingent on owner financing," I said. "After all, you see them all the time ? 100% financing, they haven't checked credit..."

"That won't work," he said, "I offered it to them, but with my credit I couldn't get enough for the note to satisfy them."

"No problema," I replied, just make 100 offers ?someone who doesn't need the cash (at this time) will show up."

"But," he went on to say, "we want that house... It's been my (new) wife's dream home for the last twenty years." Then he added, "It's a good deal..."

Oh!... "You know better than to fall in love with the property," I replied. "First get the deal right."

Too late. So we did have a problem... Except for the fact that, because he's now in business, he now has cash flow. He's closed a few notes, sold a number of courses, and has cash tied up in another business. He has accounts receivable and accounts payable. In other words, things are in motion.

The solution? S-t-r-e-t-c-h. If we couldn't use owner financing, we could still use creative financing.

He had the ability to buy that house he wanted so badly, he just didn't know it. I slipped on my consulting hat and helped him see the hidden assets he had that could make it all happen ?if he was willing.

For instance, the policies of the lending institution itself. Did you know that if you put 20% down you can get a loan with no income verification and bad credit? No 2 years of tax returns? No investigations? No raking you over the coals?

Another asset. He was sure, based on comparable sales, that the property would appraise more than he was paying for it ?from a distant owner. Verified equity.

Another valuable asset ?he had cash flow in his business. (He just lacked the concept of how to manage it.) We got the lights turned on in his anxious head.

He simply "borrowed" $25,061.99 from his business. Sure, managing his cash flow took some juggling. And it meant he temporarily got behind in a few other debts... But, hey, no one was checking his credit anyway!

A few days after closing he strolled down to a different bank. And, using his equity cushion above his purchase price, got a 2^nd mortgage at 90% of the value of the house that also didn't check his credit. Now he had 100% financing! Nothing down! Then he paid his company back, got current with his debts, and happy with his wife, living together in their new 2,000 square foot 3 bedroom, 3 bath house.

In all humility, I must say that the greatest hidden asset he had, was me. Because I knew how to help him access his other hidden assets. This expert counseling ?that is very hard to find! ?is as close as the phone, another free service you get from your association with Diversified Resources.

If you're serious about having a long-term consistently profitable relationships with notes, structured settlements, and annuities, you've simply got to understand the crucial elements that go into determining the value of a note or cash stream. Also, you've got to learn how to explain them to customers.

As you know, lots of different factors go into valuing a note. This includes, interest rate, term, creditworthiness of the payor, appraisal value, LTV, owner/non-owner occupancy, and seasoning.

Here's the simplest explanation we've ever found. After explaining that ALL things go into the mix of evaluating a note, give this for-instance...

We have a saying in the industry, stating, "All $100,000 notes are not created equal." Starting with the same identical principal balance, or loan amount, $100,000, with different interest rates, for instance, we come up with radically different "notes."

For instance, let's take a $100,000 note with a 30 year amortization. At 8%, a fairly common unconsulted rate recently, the monthly payment, is $773.76. (They've heard some advertisements somewhere that rates are low.) The same $100,000 with the same 30 amortization period, but at 11%, carries a monthly payment of $952.32. Now you tell me, are these two notes of equal value? One pays $773.76, the other pays $952.32, a difference of $178.56 every month! A total difference of $64,282.82.

This wakes the seller-prospect up to the fact that, 1) if they've got a note already, it will be evaluated on the basis of things that make a REAL difference, and 2) if they don't have a note yet, they'd better listen to your advice (which ties them ever more closely to you, doesn't it?)

You're used to solving problems with owner financing... But have you ever thought about cashing in with the real estate itself ?using notes?

In other words, how much money would you like to make as a "FSBO" entrepreneur, rather than merely a broker?

Here's how simple it can be! You know how after you talk to the seller about solving their problem with seller financing, you're still stuck looking for the one thing they really want... A Buyer?!! This time you solve that little problem by agreeing on a small down payment and monthly payments to buy their house. As a savvy note broker, you can even arrange this owner-financed purchase at zero interest! (Something you'd NEVER let them do if you were advising them on getting top dollar for a brokered note!) Next, you simply turn around and magically offer the same type of no-qualifying financing to your buyer with payments that go directly from the buyer to you with no bank in the middle.

You become the bank, by collecting a monthly payment from your buyer and paying your seller each month, keeping the difference. As you're well aware, there are millions of people who can afford to buy a house but can't get qualified because of the red tape rules and most banks. So when you ask for a modest down payment and monthly payments, your buyer is only too happy to buy the house from you... you're the only game in town! YOU KNOW THIS! THIS IS HOW YOU SOLVE SELLERS PROBLEMS CURRENTLY, GETTING THEM TONS OF EAGER, ABLE BUYERS!

Buying And Selling A House Using Owner-Financing Creates At Least Three Distinct Profit Centers For You

1) Your first profit center is the difference between the down payment you paid the seller, if any, and what you collect from your buyers as their down payment. This can be anywhere from $500 to $30,000 net profit you collect within days of finding the deal.

2) Your second profit center is the monthly spread on your incoming loan payment from your buyer and your outgoing payment to your seller. This can run from $100 to $1000 per house each month. This is money coming in whether you are working or not, sick or well, at home or on vacation ?even if you're dead and buried!

3) Your third profit center is the difference between your purchase price and your sales price, which can be from $5,000 to $150,000 on each deal. These cash paydays can come immediately, or later in the deal . . . But the best part is, you have nothing more to do to get them.

You have a tremendous advantage, because you already understand the full process. Now, instead of helping someone else, help yourself!

Financing that requires No qualifying, No banks, No loan committees... where only you decide which buyer will get the wonderful house you're offering. It's a winning solution for the seller and the buyer.. . and, when you include your profit, it becomes a win-win-win situation!

Discover your own opportunities to profit big-time in a new way in the FSBO market, and how you can get Ron LeGrand's $499 Lease/Option Cash-Flow System absolutely free! (If houses were cars, this would be like selling Lexus!)

http://www.realprofit.com/cashflow Or, for the 42 page printed report, simply send $12 shipping/handling in cash, check, money order, or credit card by mailing your name, address, and credit card info to Diversified Resources, 7051 Hwy 70 South #2145, Nashville TN 37221. Fax: 615-662-3108. Better yet, call me directly during business hours. We'll chat about it. Ask for me, Ted. 615-662-3169

P.S. There's a limited number of FREE Lease/Option programs available. If you are one of the first 60 to respond, I'll guarantee you can get yours! Hurry!

J.P. Stroup was nice enough to willingly share his story and advertising piece with you. That's one thing I like most about our affiliate network... Frequently I hear people say, "Aren't you all competitors!" But it never seems to work out that way... Instead, because of people who consistently make the same kind of gesture that J.P. is doing, I say, "No, we're co-operators!"

I would suggest you use his story to broadcast your own abilities. Call FSBO's, ask if you can send them one piece of paper, and then follow up 1-2 days later to see if they're interested. They will be. Starting with the headline, you're talking straight to the heart of the troubled FSBO!

Once upon a time Dick & Jane* owned a very pretty Midland home. In August 1997 they listed their home for sale at $95,000.00 with a good realtor. After ZERO offers, the listing expired, then was extended at a reduced price. This listing expired, also with ZERO offers. Now a bit anxious (understatement!), Dick & Jane lowered the price again, and listed with another good realtor. Finally, on June 6, 1998, the last listing expired. No offers ?after nearly a year on the market. Zero - Nada - Zip. Amazing ?but not amusing.

Now, more than anxious, Dick & Jane placed a SPECIAL custom designed "by owner" classified in the Reporter Telegram for Saturday, June 20, and Sunday, June 21. By Monday evening, June 22, more than 25 buyers had responded. 18 buyers had already toured their home, and,

Dick & Jane then selected their choice from the pool of buyers, and a no haggling Purchase Agreement was signed at the original $95,000 full price! Shortly thereafter, the deal closed. Clearly, Dick & Jane used different sales tools to get this wonderful different result.

Remember, ZERO offers from a year's efforts by professional realtors, even with drastic price reductions.

Now you can relax also, since, NO, we are not realtors, and we do not take commissions or fees from you for our work. Instead, your buyer pays!

"How To Collect BigTime On Your FSBO Contacts"

We keep getting your questions on how to best approach home sellers to offer potential seller financing. You're right on, as we're closing more FSBO deals than ever before. The BIG benefit relates to selling. Whereas the homeowner trying to sell their house may be getting a trickle of callers and lookers, if they will add a simple phrase like, "seller will finance," or "owner will carry," they'll unleash a tidal wave of inquirers. With so many more people looking at their property, it's so much easier to hook the sale. This is what you are offering.

So how do you present it? Of course your present it with the advantages weighed for the seller. A good opening question is, "Mrs Seller, if I could show you a way to get a flood of buyers wanting to buy your property, would you be interested?" What do you think they will say?

After that, it's always a counseling type of arrangement. You want to explain, first, that you can help them sell their home quicker, then explain how you do that, then explain how it works. You've addressed the first point, selling quicker, in your introductory remarks. Next tell them that you can do this by a revolutionary new program whereby you can help them structure a note for seller financing that you will buy at the closing table. It's important to run these ideas together, actually speaking them in the same breath, because the sore point of seller financing for many sellers is that they don't want to hold a note -- they need the money! They've likely already been approached for that by a prospective buyer, but they didn't have the creative resources you now offer them. Ah, now they are interested.

In certain respects it's no different talking to would-be note holders than it is to seasoned holders. Sure, at the appropriate time you want the seller to understand that there is likely to be some discounting -- depending on how things are structured. Add, "And I'm here to help you get the maximum value for your house and your note that you possibly can." As you know, in certain instances, like with the partial or multiple stage payout, you can even offer them full face value.

Even the discount is easily managed, because, as they know, the people making offers on their home are offering them a discounted price on the home. "But now, Mr/Mrs Seller, you can stand firm on your price, because you're offering financing."

"And I'll help you construct a note that is very valuable, so that you'll get top dollar for it. Would you like that, Mr Seller?" Unlike with a person already holding a note, where the terms are locked-in, you want to help the seller to understand in a general way the impact of various conditions in a note that make it more or less valuable. So you'll need to explain the potential impact of different interest rates, terms, and down payments.

How can they charge an interest rate of 10-11% when the savings and loans are offering 8.50%? That's a humorous question, because the reality is far different than the perception broadcast through advertising. In the middle of this last sentence I picked up the phone posing as a potential mortgage customer and called two premier mortgage offices in Nashville. In response to my questions they said, "They vary greatly." Further inquiry forced them to tell me their rates go up to 25%, depending on various factors. Another officer at another institution back-peddled on the question with, "There's such a diversity of loan products!" Just explain this reality to the seller you're talking to.

Further, help them communicate to their prospect that their loan involves no points or loan origination fees, tack-ons of thousands of dollars that greatly impact the effective interest rate. The deal will be good for the seller and the buyer.

Several illustrations for your enhanced understanding follow. Assume a house on the market for $140,000.

CONVENTIONAL FINANCING -- if the person has 20% down and qualifies -- discount applied to house, which sells for $130,000.

Cash down	$26,000
From financing	104,000
TOTAL	$130,000

	@ 8%	@ 11/25%
Cash Down	$14,000	$14,000
Proceeds from note sale	97,695	117,803
TOTAL	$111,695	$131,803

	Amortized	Ballooning
Cash Down	$14,000	$14,000
Proceeds from note sale	103,605	114,491
TOTAL	$117,605	$128,491

These are just two of the parameters that affect the value of a note. Partials and multiple stage payouts offer you even more ability to perform what seems like magic with money.

The more you understand the variables that affect the value of a note -- and the more you help the seller to understand -- the more likely your are to walk them down the aisle to closing. "Win-win-win" -- the seller, the homebuyer, and you all benefit.

Sometimes sellers new on the market are still over-valuing their property, but those who have had a house on the market for thirty days -- or who have had a potential deal fall through -- are eager prospects. If someone you contacted wasn't interested, politely and professionally followup in thirty days. We've had a number of deals go to the closing table that started off just this way. Statistics indicate that the brokers earning exceptional incomes do it just because of this point. Average people only ask for the sale once. Above average people ask for the sale twice. What Tom Hopkins, America's great sales trainer calls the "champion," asks for the sale seven time. Listen closely, you are face to face with the difference that makes the difference. More on this theme in "Paper Successes."

SPECIAL NOTE: You can save an additional $27 by enrolling simultaneously in both courses for only $257 + 10 shipping/handling.

For your convenience, we've included an order form at the end of this newsletter. The FSBO is still your most productive target. If you want to enjoy new heights of prosperity in 1997, don't overlook this market!

n	i	PV	PMT	FV	offer @ 12.5% yield
15yr	8	$126,000	$1,204.12		97,695.74
15yr	11.25	$126,000	$1,451.95		117,803

The Paper Profit$ New$Line

"How To Collect BigTime On Your FSBO Contacts"