You are invited to forward to friends, colleagues and clients.

Happy New Year from all of us here. Some New Year Resolutions.

1. The story of the sliding glass door.

2. Get a return on money you owe.

3. Create your own notes.

1. The story of the sliding glass door.
About 6 months ago I had the glass replaced in a sliding glass door. A week ago I noticed the aluminum side had become detached from the door. I called the company who put it in who told me they could fix it but there would be an $80 repair charge. I reluctantly agreed and set an appointment for the following morning.
No one showed up and I called back. To be told that they had forgotten to write the appointment down. I reset it with them for the following morning. No one showed up again. I phoned and was told they were running late but would be there soon. No one ever showed up. I ended up calling another, more efficient company. Of course I will never do business with the first company again.

Three morals to this story:
It is so hard to get good customers in the first place, don't drive away those you have with incompetence.
Write things down and keep your word.
If you don't want to do something, don't waste your time or your client's time with multiple phone calls and broken promises. Just be upfront and say we can't help you.

2. Ask for a discount for paying in advance.
For example. Let's say you rent a storage unit for $50 a month. Would they give you one month free if you paid the year in advance? Let's look at the numbers as an example. You would usually be paying $50 on the first of the month for the year. Instead on January 1 (for example) you pay $50 (which you had to pay anyway for January) plus $500 for a total of $550. You now no longer have to make a $50 payment on February 1, March 1 etc.

Using your trusty financial calculator (or the one on our web site at Financial Calculator) enter Present Value =500, Payment per period = 50, number of payment = 11. Now solve for Interest Rate.
You will get an answer of 19.48% as your return on investment. Better than bank CDs or even hard money mortgages.

3. Create your own notes.
Buy something for less than market value and sell it on terms. For example: Buy a "don't wanter" house from a motivated seller for $100,000. Now sell it on terms for $130,000.

I'm going to assume you paid cash for the house to make this example simpler. But of course you would usually be getting financing.

Let's assume you sell it for $10,000 cash down to someone with a decent job but who can't qualify for a mortgage. You create a $120,000 mortgage amortized over 30 years (360 payments) at 10% per year interest. The payments compute at $1,053.09 per month. Use our calculator, link above.

Your true return on this note is not 10% but much more. You got back $10,000 as a down payment, you paid $100,000 so your net investment is $90,000. (I'm ignoring closing costs for this example).
You will be generating $1,053.09 per month. Now enter the following in your calculator. Present Value = 90000.00. Payment per period 1053.09, Number of Payments = 360.
Now solve for Interest rate.
You should get an answer of 13.81% per year. This is your true return. (Not the note amount of 10%)

Now let's say that instead of paying cash when you bought the house for $100,000 you put down $20,000 and got a 80% Loan to Value loan for $80,000 at 7% for 30 years (360 months). Your payment on that loan would be $532.24.
You put down $20,000 but got back $10,000 cash when you sold the house. So your net investment is $10,000. (Ignoring closing costs for this example.)
You are going to receive a net payment of 1,053.09 - 532.24 = 520.85 per month for 360 months.
Now enter the following in your financial calculator (link above).
Present Value = 10000.00. Payment per period = 520.85, Number of payments = 360 and solve for interest rate.
Your return is a staggering 62.50% per year.

Can't afford a house. How about doing something similar with a used mobile home. Or a even a car. NOTE. Cars have wheels so you risk your collateral disappearing!

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