Are you a flipper? Were you a flipper? You may want to read an interesting article from CoreLogic, comparing 2016 flipping activity to the 2005 peak. The article also tells you the cities where a lot of flipping is going on.

Corelogic.com, Insights Blog, April 26, 2016.

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Kurt S. De Meire

800-664-2567

Promissory notes are valuable financial tools. Unfortunately, they are underused because they are not understood. They have 12 or more important uses, including:

1. Hold for investment income
2. Hold in a tax-free or tax-deferred IRA account for income
3.  Sell for cash
4.  Exchange for real estate
5. Use as a down payment on real estate
6. Use as security for a loan
7. Use to repay a debt
8. Use to make a gift
9. Use to reduce taxable income
10. Use to divide assets in a business or domestic settlement
11. Each of the note’s payments can be sold – partially or in total
12. A note’s balloon balance can be sold – partially or in total

Depending on the note’s characteristics and your goals, many possibilities exist to improve your financial picture.

Source: Lawrence(Larry) Tepper, www.promissorynoteappraisers.com, as printed in The Paper Source Journal.

One financial benefit of being self-employed – tax write-offs – morphs into an ugly disadvantage when self-employed workers try to get a mortgage. It’s not impossible – but it’s not easy.

Lending standards are tough, and lenders typically want to see two years worth of tax returns, which often don’t accurately reflect take home pay. You have to prepare longer than most borrower’s before buying a home:

1. Write off fewer expenses in the two years leading up to purchase of a home.
2. Don’t comingle business and personal funds.
3. Use a business credit card for business purchases.
4. Show year over year increases.
5. Choose your years carefully. Lenders will ignore seasonal spikes and valleys by averaging out income over 24 months. But, they don’t like to see a decline in income from one year to the next.

Source: Chris Trafecanty, Mortgage Report, Lighthouse Home Loans, ctrout@fasterhomeloans.com.

If you have ever had a misunderstanding with another person, where each of you looked at a situation very differently – after each of you thought you had an agreement – you know what the power of words can mean. Somehow, someway the words can get in the way.

This issue really hit home with me recently. I am taking Continuing Education Courses as a requirement to renew my California Brokers License. In the Real Estate Contracts class, this very topic was addressed – to say what you mean and mean what you say – by using words correctly. Here are 3 simple rules that were emphasized that you may find of interest:

1. Never change your language unless you wish to change your meaning, and always change your language if you wish to change your meaning……Scott J. Burnham, Drafting Contracts, 1987.
2. Do not use different words to denote the same things; and don’t use the same word to denote different things…..Legal Drafting Style Manual, March 1978.
3. Do not use “and/or.” The expression is ambiguous. It has caused many lawsuits. The words “and” and “or” have quite different meanings. You might think that “and/or” means A or B, or both. Not true. Some courts have even said “and/or” means the court can choose either “and” or “or”, whichever the justice of the situation requires. Other courts have come to other conclusions. Don’t use the expression. ….Robert C. Dick, Q.C., Legal Drafting (2d).

The lesson here is to “say what you mean and mean what you say.”

Rich Barton and Lloyd Frink co-founded Zillow little over a decade ago. Barton’s 1st company was Expedia. He creates companies but does not stick around to run them. Today, Zillow occupies 12 floors of office space in Seattle with nearly 1000 employees there and 2200 nationwide. Here is a brief summary of a recent interview with the two:

“Lloyd and I were shopping for houses and we couldn’t believe how disempowered we felt. We had to hire a professional and get a little drip-drip of information. We kind of had an epiphany. We were like, “Oh my God, this is so hard. It’s 2005 and the Web has been around for 10 years. Why isn’t it easier for us to get basic marketplace information?”

The seed for Zillow was planted.

“How would it be to be able to strap on the Oculus virtual reality goggles and take a spin around some apartments or houses? That’s a whole interesting technology vector that we’re pushing on. Then there’s the basic mechanics of home shopping and the way documents are transferred. That’s going to change. We are going to be leading on all of it.”

Source: Rachel Lerman, Los Angeles Times, Business Section

There was an interesting article posted on Linkedin recently about the proper mindset to have when investing in real estate. Stephan Piscano encourages investors to focus on cash flow as the key strategy – and not the specific property or even the ups and downs of the real estate market. Read his article at:

http:/bit.ly/LinkedinREArticle.

If you would like to learn more about notes, you may want to consider attending the Paper Source Seminar in Las Vegas this April 28-30. The key players in the note industry will be there and you will learn a lot about the different types of notes people in our industry are buying.

Go to www.PaperSourceSeminars.com. Click on Register, and enter “denny” in the coupon code to save $50.

If you are a true sports fan and particularly a college basketball sports fan, March is your favorite time of year. Why? March Madness.

There are 339 Division 1 schools in the NCAA and 68 of them will begin playing in a single elimination tournament that starts March 15 and ends April 4 in Houston, Texas where the 2 survivors will play in the championship game. Every year, there are 2 or 3 “Cinderella” teams that no-one has even heard of. Suddenly, these teams are beating  highly ranked teams and turning the tournament upside down. It’s extremely exciting. I find myself rooting for these underdogs – schools like Butler, Florida Atlantic, Lehigh – to beat the big boys – Duke, Kansas, Kentucky.

If you like sports but maybe you are really not a big fan of college basketball, check out the NCAA Tournament this year. Each game is do or die, and that element alone brings a whole new dynamic to the sport.

In the note business, we have our own March madness going on. Activity is high. Emails are coming in and the phone is ringing a lot. Many note holders are looking for cash this time of year, and the question for them is whether their note is the best source for that cash. If you hold a note and find yourself looking for cash, you owe it to yourself to seek options, and determine if your note is the best option for that cash.

Our business is providing options to people who are looking for cash. You won’t know how good – or bad- an option selling your note is unless you ask.

So, email or call me today and let’s see if I can help.

Crowdfunding: “The practice of funding a project or venture by raising many small amounts of money from a large number of people, typically via the internet.”  Forbes.com

Typically, Crowdfunding has targeted and been appealing to small business owners, entrepreneurs and tech start ups. Why? Because it was an opportunity to showcase a business and offer the business owner a chance at success, without dealing with banks and their rules or spending time finding and convincing private investors.

In the past few years, some firms have carved out a niche by lending money to real estate investors who want to buy, renovate and flip a property. Here in California, firms like Patch of Land and Peer Street loaned about 100 million dollars last year to house flippers. Crowdfunding investors will have stringent income and net worth requirements and interest rates charged to flippers are typically high.

These firms are filling a niche, and that’s the key. If you are into flipping, you may want to check out the viability of using a crowdfunding firm for your next project.

It’s tax time again, and the odds are that you or someone you know may get an unexpected message from your accountant or the IRS. That message? You owe a bunch of money from last year’s return or from 2014 or some past year’s filing – money you do not have. Maybe your accountant made a mistake, maybe you forgot to provide some crucial information, maybe you can’t substantiate some deductions. Whatever, you have a problem. You have to find money you don’t have.

Well, if you are a note holder, your note could be the source of the cash needed to satisfy the IRS. Take a look:

Say you have a $100,000 note at 6% for 240 months with a monthly payment of $716.43. You have received 15 timely payments and the current balance is $96,637.27. Your accountant shocks you when he says “you need to come up with $30,000.”

One option to consider would be to sell 60 monthly payments of $716.43. In return, the investor would give you $30,000 today. After the investor receives his 60 payments, the note would come back to you, and you would receive the remaining 165 payments. The principal balance at that time would be approximately $80,363.85.

You get your $30,000 today, the note stays in tact, you satisfy the IRS, and you then get to enjoy all the remaining payments when the note reverts to you.

The greatest thing about being a note holder is the opportunity it provides you to get the cash you need when a cash crunch pops up in your life. You may have a better cash option than your note. That’s fine. Options, we all want options. Explore your options, then decide.

Forty percent of commerce is still done with cash and check, but the percentage is slipping every year. Apple CEO Tim Cook turned heads this past November during his keynote at Trinity College, Dublin when he told the assembled that “your kids will not know” what cash is. The remark seemed to substantiate reports that Apple is in discussions with several large banks to develop a P2P banking system that would allow users to seamlessly transact payments between wireless devices. Facebook and Google are also rumored to be developing similar P2P payment systems, setting the stage for a truly competitive market sooner than we may have thought. The success of the November IPO of Square, the mobile payments company co-founded by Jack Dorsey, and the continued growth of PayPal’s Venmo, which plans to launch in 2017, means that there’s a lot of money riding on whether your kids will know what cash is.

MSN.com, Top 10 Business Stories of 2015