Not a month goes by that I do not get at least one question as to
what a 2nd lien is worth. With rare exceptions, 2nd liens are not marketable to note buyers, especially if you have a small 2nd behind a large 1st.
The risk just outweighs the reward. These notes are often referred to as 'throw away seconds'.?
Here is a powerful wealth building technique that comes from the
NOTE PROFESSOR NOTEBOOK. This technique works well, no matter what position the note.? Simply trade your 2nd lien
AT FACE VALUE for real estate or personal property.
FOR EXAMPLE, there is a property that has a $100,000 ARV. Everybody is offering the property owner $50,000. You are holding a $10,000 second. Why not offer $60,000? The $50,000 cash that everybody else is offering, PLUS your $10,000 second? Put yourself in the position of the seller. Which offer would you accept? The $50,000 cash only, or the $50,000 cash PLUS your $10,000 note?
You now have turned your 'unmarketable'
2nd lien note into gold.? Instead of having to accept 30 cents on the dollar, you have traded an almost worthless note into equity in real estate. Be sure to disclose to the property seller that there is always a chance the note will default. Just be honest, and do not mislead the property owner.?
Knowing how to buy and sell real estate using notes is paramount if you are going to be prosperous in today's market. Those who know how to use real estate note techniques will be making deals while many will be on the sidelines wonder why you are so successful.
Knowledge is power. You are now a little more powerful.
Tom Henderson has been in the note business since 1980. Not only does he have a successful note buying business, but Tom also teaches classes on real estate note techniques. Because of his 'no nonsense' approach, Tom is a sought after speaker for real estate groups and conventions. His website, http://www.hpnotes.com/, offers education and advice to beginners and advanced real estate investors.
