Posted by Sheik on November 20, 1998 at 10:31:14:
VERY nicely put.
You certainly are a thinker…
~sheik
RE retirement with paper? - Posted by Terry Alta
Posted by Terry Alta on November 19, 1998 at 15:47:16:
I’m interested in retiring from the RE game after years of rehabs, tenants, etc. It seems that if someone has a six figure nest egg that paper could provide a very comfortable retirement. Are there any web sites or investment clubs that cater to RE paper investors? If 40-50% returns are possible why continue with the headaches of RE ownership? I realize this is different than most posts here but isn’t retirement the reason we’re all working so hard?
Re: RE retirement with paper? - Posted by Darrell
Posted by Darrell on November 21, 1998 at 17:38:46:
Great question, Terry. I’m retiring in about a year with a six figure retirement account. Question is, what’s a reasonable rate of return? CD’s, or similar won’t take me where I’m bound. I guess the question is, what’s a realistic rate of return, assuming reasonable knowledge of the note industry? I’ve always assumed a high rate of return equals a high rate of risk. Maybe that’s not so, but I’m interested in responses, as well. Thanks again for asking the question.
Does “Long-Term” portfolio really exist? - Posted by Stacy (AZ)
Posted by Stacy (AZ) on November 20, 1998 at 12:30:10:
First, John, I just received your 5 day bootcamp video course and have started through it. I want to compliment you on your teaching style. You make it all very easy to understand. I’m looking forward to the rest of the series.
My question involves the ability to build a “retirement” portfolio that doesn’t continually require either refunding or refreshing with new notes. Strictly from a retirement standpoint, it seems that purchasing long term notes and tails that mature several years hence, and expecting it all to hold together when one retires, is a little on the optimistic side. Since the typical lifetime for loans is 5 to 7 years, a “tail” that starts paying 15 years from now will probably not survive. As you can tell, I’m new to these concepts, and am trying to understand the portfolio management that is required.
Drawing a parallel with owning rental properties, at some time in the future the goal is to own them free and clear and happily live off the cash flow. There’s little chance that the income stream will disappear. But with notes, it seems the portfolio must be continually managed because of payoffs, etc.
I’m not saying I’d rather own rentals, or that it’s a huge burden to manage a note portfolio. Quite the opposite. I’m just having trouble with the concept of buying notes and expecting long term performance. Below is an excerpt from a reply you gave to one of my previous posts, that seems to say the same thing.
“Beyond all this, is the fact that my long term note portolio is not “long term”. It is constantly being improved, “refunded”, and is very liquid.”
Maybe the answer is as simple as, “Yes, you’ll have to continue to manage your portfolio into retirement.”
Thanks for your excellent help!
Stacy
This is the place - Posted by John Behle
Posted by John Behle on November 19, 1998 at 21:36:47:
Just like they said when they entered the Salt Lake Valley, “This is the place”.
I say that because almost all other sites and educators focus on the business of paper brokerage. The job aspect instead of the investment aspect.
The majority of “Loan Lemmings” out there are all chasing after the same sources and types of paper and financing. Instead of becoming more creative as an industry, in the last 20 years paper has become less creative and the general level of education has lowered.
That’s the good news for all those that are willing to be both creative and educated. It’s an edge like none other. There are wonderful profits available for the investor - if they know what they are doing. For example, J.P. just posted an article of mine about a note titled “26% yield with no competition”. Thats on a good note. You do not have to sacrifice safety or peace of mind to get a high yield.
This is the place to learn how to invest and retire in the paper industry.
This Is The Site. N’est-ce Pas, John? - Posted by MN~Chicago
Posted by MN~Chicago on November 19, 1998 at 20:22:26:
Terry:
There are a few other note sites, like Noteworthy
and Papersource, but for information and how-to,
John’s daily posts and numerous articles are a
clinic unto themselves.
I was about to post a related question, asking,
“How much can one expect to make, for example, on
a monthly basis, buying and fixing up notes, ON
AVERAGE?”
Mark McGuire and Sammy Sosa broke the home-run
record, and many players never hit a home run
during the season, but the average home-run hitter
can be expected to get 30 home-runs in a season,
(or whatever the number is).
John: What would you surmise that someone who is
diligently applying your principles and techniques
could expect to accomplish once he or she is up and
running and doing a regular, full time effort, in
terms of imcome, that is?
Back to you Terry. Your question makes it seem like
you are new to this site. There is a literal treasure
of information available here, and John Behle is
superbly responsive to all questions. Equally as true,
John has all the necessary tools one would need to
accomplish that about which you were asking.
I have purchased some of his materials and found them
to be outstanding. I am also in the process of
positioning myself to use all of John’s courses to
build a note portfolio, first from investors, and
then myself.
Good luck in your retirement endeavors.
I’ll meet you on the links! - Posted by DH
Posted by DH on November 19, 1998 at 18:17:35:
I’m with you Terry. Some quick calculations tell me that I’d be golfing too. The question is are you willing to spend the time to learn the note business as you learned the rehab business? Maybe John will pass some of the bad (30%)paper your way!
Risk vs. Rate of Return fantasy - Posted by John Behle
Posted by John Behle on November 22, 1998 at 24:52:13:
The risk vs rate of return theory that we are all taught holds true in most cases - but not all. Paper is one of the few violations of this. There are ways to get very high yields in paper without facing large risks.
In fact, the refunding process and most note improvement techniques actually reduce risk.
What is an average rate of return on a paper portolio? I don’t believe there is an average. Most of the people out there with notes do not actively “work” their portfolio trying to improve it.
I had one of my competitors mention to me at lunch one day how he had made an extra 60k in profits the previous year just through notes paying off early. Yet they were doing nothing to encourage the process and did not begin to do it.
To get an average of 20-50% on your portfolio is simple. That would be the minimum you look at.
Absolutely! - Posted by John Behle
Posted by John Behle on November 20, 1998 at 17:30:24:
The strategy is to continually improve notes for greater profits, but in the meantime, you can invest in high yield paper through wraps or rehab type deals. As you get into the videos more, focus on the wrap techniques. In particular “Split Wraps” and “Split Cranks”. These are techniques where either very little capital is invested or the money is financed out through an institution. What you are left with is extremely high yield paper that you would seldom ever want it to pay off early. Many of these deals may leave me with only a couple hundred dollars of “Equity in the wrap”, yet have $100-200 in monthly cash flow.
As you mentioned, “Tails” are an excellent way to balance out the portfolio. Towards the end of the seminar, I also talk about PRAM’s (Private Reverse Annuity Mortgages). That is a concept I developed to re-invest at high yields. You can safely throw the excess cash flow from your note portfolio back into the market on a monthly basis at high yields.
All in all. I think once your portfolio grows, it may be harder to drag you away from it for retirement than you think. The nice thing is that you can play with the portfolio on your own time and terms. You control it, not vice versa.
I’ve never had a mortgage call me at three in the morning.
Three Essential Ingredients of Success - Posted by John Behle
Posted by John Behle on November 19, 1998 at 21:55:59:
The 3 Essential Ingredients of Success
by John D. Behle, EMS
Over nearly twenty years of investing, teaching and writing in the field of real estate and discounted mortgage investment, I’ve come to some conclusions as to what is required for success.
Countless times I have wondered why two seemingly capable individuals have totally different experiences. One is very successful and one is caught in the “paralysis of analysis.” One approaches investment like a pitbull on acid and another is frozen by fear. One is enjoying prosperity and sipping on exotic wine and the other just “whines.”
What is the difference? Why do some get so caught up in the education drug that they fill their garage with home study courses, but can’t fill their car with gas? Over the years I’ve watched the “winners” and what makes them successful. I’ve struggled trying to please and educate the “whiners” encountering primarily frustration - until I found the key about 12 years ago. As I’ve incorporated the three elements I identified into my seminar trainings, the success ratio of my students has skyrocketed. Most of the world and seminars focus on the least important element only. A few make some attempts to address the second element. You are fighting a forest fire with a squirt gun if you don’t deal with the most important third element.
“If you think education is expensive, try ignorance”
Education is the first element and 10% of what is needed for success. I would never underplay education and I don’t regret the 30-40 thousand I have spent in cold hard cash on education. Proper education gives you the tools and can help with confidence and creative options and solutions. Education is not enough. You can take every seminar or home study course on discounted mortgages and not make a cent.
A Team and Resources
This second element is at least twice as important as your education (20%). At first you will need a team to cover your weaknesses and inadequacies. Once you have the knowledge and experience, you need a team to multiply your efforts and use your talents to their best and most profitable abilities. When a proper team is in place, your liabilities are covered and you will not be as likely to be paralyzed by fear. There isn’t enough space here to adequately cover who should be on your team and how to build it, but drop me a line and I will send you some more information on the subject.
“I see only the objective, the obstacle must give way”
Napoleon had an attitude of success. He had “Intention.” Any great leader or business man has this essential ingredient. It goes way beyond listening to PMA (positive mental attitude) tapes and motivational seminars. No doubt, there is some value there. For many, they can also be frustrating, self-defeating and counter productive because it is only a part of what is needed.
You have to address several factors in addition to thinking more positively. Your conscious mind and attitude are only the tip of the iceberg. Try to move or steer an iceberg by grabbing a hold of the tip. Not possible, but exactly what people try to do mentally and emotionally.
Other elements are far more important. These are “limiting beliefs”, “emotional blocks” and “self-defeating behaviors.” Deal with these and life will change. Prosperity can flow, relationships will be abundant and you will realize your dreams.
Limiting Beliefs - “Argue your limitations and they are yours forever.”
Limiting beliefs are beliefs imposed by your “un-conscious” mind. You don’t have a lot of control here, they just are. Some are easier to spot like “I’m not a good singer” or “I’m no good at public speaking” or “big dogs want to eat me… and little ones will try too.” Other limiting beliefs affect all areas of your life, especially financially. Finances reflect all your beliefs about self-worth and scarcity in your life and the world. You can choose to believe in “Economic alchemy” or in “allocation of scarce resources.”
You won’t make a penny over what you feel you are worth or deserve. You may not be conscious of these types of beliefs but there is a way to learn what they are, where they came from and how to alter them.
Emotional Blocks
Stephen Covey made a couple statements that summarize this area well. “All sin is outward manifestation of inner turmoil”, “Unexpressed emotions never die, they just manifest themselves in uglier and uglier ways” and “If you try to strangle an emotion, it struggles for life. If you let it live, it dies in the birth process.”
The emotions, both the ones you term good as well as the ones you would consider bad that are in a sense stuck inside you influence your every action and all aspects of your life. Self-defeating behaviors
Actually, self-defeating behaviors are just a manifestation of the other two factors. Becoming aware of and dealing with these behaviors can aid you in identifying beliefs and blocks that stand between you and success. You can fight the behavior or identify the root. Fighting the behavior will not in the long run make much of a difference. The roots are the simple key and easy to deal with.
Goals can be extremely self-defeating and useless
Once you deal with the areas we just talked about, then the “iceberg” is easy to steer and success can be yours. You can learn to set goals properly. Very, very few know how to do this. Most “goal” educators set you up to fail. There is a powerful way to look at goals and in particular “INTENTION” that makes a major difference and works. Never set a goal again that you are not absolutely certain you can and will achieve. Just don’t do it. Don’t set it if you aren’t willing to do what it takes. By the way, if you aren’t aware of your purpose and values, it is nearly impossible to set proper goals. You are fighting an incredible battle if you set a goal in conflict with these inner beliefs that you do have.
There’s a proven, practiced and polished way to deal with these blocks. Certain “Personal Effectiveness Trainings” deal with all of these issues of “Limiting Beliefs”, “Emotional Blocks” and “Self-defeating Behaviors.” I give my students much of this information in my seminars, yet heartily recommend further exploration through some of the training companies that are out there.
We don’t have much space for more than a preview of this right now. I’ll write more later in some other articles and will gladly answer questions or refer you to some further resources if you would like to drop me a line or give me a call:
John D. Behle 2255 N.l University Prkwy. Suite 15-111 , Provo, Utab 84604 (801) 374-NOTE or fax (801) 344-8803 or email jbehle@lgcy.com
Average income - Posted by John Behle
Posted by John Behle on November 19, 1998 at 21:52:25:
I shy away from making income claims when it comes to paper. My stomach turns at the road shows where they run down the isle with a hundred dollar bill or stand on a chair yelling to the crowd about “A Success Story”.
Everybody’s circumstances vary. As I’ve mentioned in a number of posts, I believe there are three essential ingredients to success (I’ll post an article here that goes into more details). The largest and most important ingredient is “intention”. A home study course or educational seminar can’t give that to someone, though some self development trainings can come pretty close.
Can you make $100k your first year? Yes. Can you make double that in your second year? Yes. Can you make more? Yes. One student I ran through some intensive franchise training hit the $60k per month level in his 3rd year.
One investor student of mine made 1.45 million in one of his first note transactions. One student a few years back made $60k in his first transaction.
When I started, I was working at it about 15 hours per week and did an average of one deal per week with an average profit of $1300 per note. In other words, $1300 per week and over $80 per hour. That’s when I didn’t know much about what I was doing. When I started, there was very little education available about this industry. I was only aware of and took one seminar by John Berven.
I go through a goal setting session in my 5 day seminar. In there you discover and commit to the amount of income that you will “allow” into your life in the next year. What I know is that you will not make a penny more - or less - than the amount you feel you deserve. So, what can you make in paper? It depends on the individual and grows as their belief and intention grows. Read the article I post and then let’s talk some more.