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(This section is an exerpt from the Note Holder's Handbook.)


With all the risks we've mentioned throughout this handbook, you must be asking yourself this question, and that's perfectly understandable. All the risks we described are real, and we've experienced the trouble associated with each of them. We are investors in real estate notes. It's not for the timid investor to be sure. We do it because we are experienced and highly specialized in this area of investment. We limit our risk by following the procedures listed in this handbook. For example, we have automated systems in place that monitor property taxes and insurance premiums; generate letters to senior lien holders, late payment notices, and so on. We have a team of skilled foreclosure attorneys should a note go bad. Although we limit our risk in these and other ways, we experience the same overall risks all note holders do. We compensate for that risk by requiring a greater yield on the investment. That is why we purchase these notes at a discount from the balance. A note that earns 7, 8, 9, or 10% simple interest, for example, rarely compensates the note holder for the risk in holding that note. When we purchase the note at a discount, the yield on the investment is somewhat greater, making the investment return more in line with the risk.  (It also costs anywhere from one thousand to several thousand dollars to purchase a note.  These costs are also part of the discount.) 


Also, since we purchase many notes each year, should a few of them go bad, it's not too devastating. The greater return earned for all the notes we purchase compensates for the few that go bad. This is not the case for the average person, however, where loss of the entire principal on their note may have devastating consequences to their financial situation.


Finally, and perhaps most importantly, instead of having one or a few notes earning simple interest, we compound the interest by constantly reinvesting the principal portion of each payment that comes in – we don’t spend the payments. Our rates of return therefore are compound rates. This is only possible (in a practical sense) if you make a business of investing in notes and understand how to compound the interest over a long period of time. This is an important point: note holders often mistakenly believe their note is something very valuable because they get many letters offering to purchase it. The fact is that their single note is not very valuable; in fact, it’s worth something less than its current balance due to the risk, time value of money, and so on. However, the note is valuable to a professional investment company that knows how to portfolio the loan, spread the risk over many notes, and compound the interest.


How To Sell A Note


Selling a note is very easy. Simply call us at 425-820-5562 and we'll take you through the process step by step. In most cases, we do all of the work. Most of the people we work with have never sold a note before, so you needn't worry about not understanding what to do.


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