Hello, everyone and welcome to another installment of our Street Smart Q and A where you send in the questions and Lou Brown gives you the answers.  Now, usually I start off the training with some ideas about what’s happening in the current economy and how this affects us, and from today’s newspaper I got some interesting information about the housing crisis.  “More Bad News for Housing” is the headline and it says “Figures bleak for foreclosures and delinquent loans.  U.S. foreclosure rates hit a record high in the last three months of 2007 and home loan delinquency rates reach their highest level in 22 years according to a survey released Thursday by Real Estate Organization.”  Do I hear any “Yeah, Baby!”s out there?  Now, that’s a “Yeah Baby!” isn’t it, because what they’re saying is things are so bad, they haven’t been this bad in 22 years.  What does that say?  I’ve told you before that once per generation we have an opportunity and this is such an opportunity right now.  They go on to say, “‘The chief culprits for the home loan woes are falling home prices and issues with sub prime mortgages'” said Doug Duncan, the MBA’s Chief Economist and Senior Vice President of Research and Business Development.  That’s the Mortgage Bankers Association.  “‘The trend is expected to continue through mid to late 2008’ he said.  ‘Our general outlook is that you should expect to see as long as house prices are declining, some continued rises in delinquency and foreclosures.'”

Now, here’s what I want you to take in.  They say all this gloom and doom and all you hear on the news is how bad things are.  You’ve heard about the sub prime crisis, you’ve heard about the mortgage debacle, you’ve heard about all these disasters and train wrecks, but did you know that less than 8% of U.S. home loans are past due or in the foreclosure process in the fourth quarter of 2007?  Did you know that the delinquency rate was 5.82% of all outstanding loans?  Did you know that the foreclosure rate was 2.4% of all outstanding loans?

Now, let me add something to this.  Let’s add one word.  Let me reread what I just said.  Only less than 8% of U.S. home loans were past due.  The delinquency rate was only 5.82% of all outstanding loans.  The foreclosure rate was only 2.4% of all outstanding loans.  Now, just think about that.  That means that 98% of houses did not get foreclosed.  That means that 94%, a little over 94% of loans were not delinquent.  So, what does that tell you?  It ain’t that bad.  Yes, while there’s a lot of money being lost by people that shouldn’t have made loans to people who shouldn’t have taken out those loans, if you look at it, a lot of people are making their loans and that means that when we see all these headlines, it’s not as bad as you might think it is.  Keep in mind that while everybody else is telling you to run for the hills, I’m saying now is a great time to buy.  While everybody else is selling, while everybody else is in fear, you should be in acquisition mode to acquire as much property as you possibly can in the fantastic market that we’re in right now.

Here’s a question from Marsha.  She says:

Dear Lou:  I own two condos in South Florida, and as you know the market over there has come to a halt.  I bought these condos using conventional financing before I took your MAS course, with a frowny face instead of a smiley face after that.  In other words, she wouldn’t have used conventional financing if she had come to my class and had known better, but of course we all live and learn and we do things based on what we think is right at the time that we do it.  She goes on to say one is held in a trust; the second is in my name.  I have a few questions.  If at some point I am unable to maintain or sell these condos and decide to walk away from them, one, can the mortgage companies put a lien or garnish funds held in a bank or brokerage account held in a personal property trust?

Well, great question Marsha because absolutely that if the property is out of your name and it’s in another name, then first of all, they have to know it’s there and then secondly, they have to be able to collect on it.  Well, if you are not the trustee of those bank accounts, then they would have to go through a third party.  In fact, under the terms of a personal property trust, all you’re entitled to is the avails and proceeds which may flow from the trust.  You might be able to control that prior to any judgment or lien attaching and that’s what I would say.  First, you would get control over that situation way before they were able to put a lien or garnish funds.

Two, can the mortgage company seize other real estate held in a land trust?

Again, they would have to know about that real estate.  Now, you did say that one of these properties is in your name, so yes, they can seize that particular piece of real estate if that is the piece of real estate that’s in default; if that is the piece of real estate that is in foreclosure.  As far as coming and seizing other assets, first, they have to number one, foreclose on the loan they have.  Number two; declare a default or a deficiency rather.  In other words, that they had a loss.  Then, after they get that loss, they have to pursue what’s called a deficiency judgment.  Then, they have to take that judgment and seek out other assets.  Once they seek out those other assets, then they would be able to, it’s likely rather than foreclose on that property what they would do simply is have that judgment against you.  Once they have that judgment against you, it goes against everything you own.  Translated, Marsha, if that property were not in your name and in fact was in the trust’s name, then that would be not anything that they could go after because you see they could only go after anything in your name.

In other words that the judgment would go against you personally, but the trust that holds that other piece of property could easily sell it and not have to pay any judgment against you.  Liens are all about individuals or companies who create that debt.  The debt or the judgment goes against whoever that is.  If your trust did not create that debt, then no, it doesn’t go against that trust.  It goes against whoever created that debt.  Hope that makes sense.

Three, can the mortgage companies garnish my wages?  I have a full-time corporate job.

If they get a judgment against you, then yes, they could garnish your wages depending on what state you live in.  Some states don’t allow garnishment of wages, but others do, such as Georgia, allow garnishment of wages.  Again, that’s only after they get a judgment.  Again, that’s only after they were to get a deficiency and after they get the deficiency, they actually pursue a judgment which I might add is very rare.

Number four; is it a criminal offense to just walk away from a property because you owe more than what it can sell for or, because you no longer want to keep throwing good money after bad?

No, it is not a crime to walk away from your debts.  It is not a crime.  That is the reason that the lender got collateral.  They wanted to have something to protect their interests so they do with the property.  Now, it might not be as much as they’d like to get, but they do have collateral.

Number five; I called the mortgage company of the property I own in trust to inquire about a short sale and they wouldn’t even speak to me.  Apparently, my name has disappeared from their records.  The mortgage company does not appear any more in my credit report either.  Can they go after the trustee?

Well, first of all, Marsha, I’m so glad to hear this.  This is actually very good news and it shows what a good student you are of MAS.  I don’t know why you didn’t put the other property in trust, but hopefully you’ll do that right away.  But, because you did put that other property in trust, and you did follow the guidelines that I lay out for you at the MAS training which is the Maximum Asset Shield training.  By the way, anyone on this call that has not come to MAS, you have to absolutely need to be there.  We’re going to do it again in August, and if you haven’t signed up for that yet, you need to.  We’ll even finance it for you between now and August and let you spread your payments out over time.  It’s absolutely critical information as you are hearing right now.  Because Marsha followed the guidelines, and the mortgage of a property that she still owns in trust actually fell off of her credit report so much so that the lender won’t even speak to her, but they don’t have any problem accepting your payment.  Do they Marsha?

So, the only thing you need to do is have your trustee sign an authorization to release information.  Then, you call as the financial advisor of the trust and of the borrower and you say geez, we’ve got a problem here.  My client is not going to be able make the payments any longer at this rate, can you work with me here to lower the interest rate or to make an adjustable rate to fixed rate or whatever that might be.  You do have some opportunities in being able to work with a lender.  Many lenders will not work with the actual borrower, but they have no problem working with a financial advisor.  So, that’s what I’m suggesting that you be.

You asked the question though, can they go after the trustee, and the answer is they would not go…first of all, the trustee has no personal liability in a debt they did not intend to accept personal liability on.  The good news here is that they can only go after the trust which owns the property.  Of course, since under our strategy the trust doesn’t own anything else, then that’s really good news.  There’s nothing else for them to go after.  We’re going to put the property in the trust; the trust doesn’t own anything else, and so, they’re welcome to have the property that’s in the trust.  Again, it’s very unlikely that they would pursue a deficiency judgment because of the expense and because it’s a judicial process, and because it’s so likely to not collect and because the cost is so high, they simply won’t shell out the cash for that.

Number six; will a foreclosure in my credit, in my record, affect the rate I obtain on home and car insurance in the future?

The answer is well, it could, but it doesn’t look like it would because it’s not even on your record.  If they were to pursue something like that, they would get a judgment the trust that owned the property, not against you as the borrower.  That really puts you in a great position.  If you are the borrower, then that is a risk that you take that they could come after you.  If they were to get a judgment, it would show up on your credit report, and the answer is yes, indeed, it may affect the interest rate you obtain on your home or your car insurance in the future.  We also have a trade out ______ 13.05 to do so any past debts of yourself or any seller that you may be working with or any buyer that you may be working with, then we could work with their credit to get it cleaned up to the point that you wouldn’t have those issues any longer.

Next, I hope by the way, that all of you learned something from that exercise.  It was a number of questions from one source, but I think they were so compelling and so valuable, that I wanted to go ahead and go through them all on this call.

Nathan and Kelly Witt ______ 13.38 have a question.

Lou, quick question:  We are currently getting out paperwork together to submit to the mortgage companies on a short sale opportunity.  We are unsure who to put as buyer on the Purchase and Sale Agreement we provide to them.  Is there anything we want to avoid so as not to raise red flags with lenders?  Thanks in advance for your help.

Well, Nathan and Kelly, you’d merely put you as agent as the buyer.  When they see that it’s you and by the way that you’re the one calling them as a financial advisor and they say well, wait a minute, it says here that you’re the buyer, you simply say oh yes, I’m not revealing who my real buyer is.  I’m going to assign the contract to my real buyer.  This is for the purposes of working with you to come up with a final number.  We’ve already obtained a contract from the purchaser and of course don’t want to reveal who my purchaser is because you might go direct with my purchaser. So, we keep that as a private matter.

Now, Nathan and Kelly, I also say that it is very unusual for a lender to even raise that question in the first place.  That should be easy.  Of course, you’ll merely assign that contract to your trust when you purchase the property.

There’s a rehabbing question here from Cindy Benson.

Hi, Lou:  When rehabbing a property, do you recommend bringing in a contractor to get an estimate and then do an inspection?  Cindy from Los Angeles.

The answer is I recommend, Cindy, that once you get the contract, you go ahead and even before you get the contract, you take out my Renovations, Volume XI, and it has a scope of work for each one of the trades – Plumbing, Heating and Air Conditioning, Electrical, Roofing, Painting, and Carpentry General.  Each one of those trades is set up on a particular set of forms and each one of those is broken out room by room and item by item that I recommend that you pay attention to.  I’ve already preprinted the things that I want you to pay attention to, and out to the right of that, you’ll actually write out what there is to do related to that particular item.  If there’s nothing to do, you simply skip that item or put N/A.  Now, the good news is you could hand write it as you go through the property, then, you can go home and on your trusty computer pull up my form and then be able to type it out.  The good news here is that now you can give that scope of work to three different contractors or more and each one of them would come back to you with their bids that would be apples to apples to apples.

One of the big challenges you have when you’re doing a renovation is if you bring in three different contractors, you’re going t o get three entirely different bids.  They will not be typically bidding the same thing.  They’ll say oh, I don’t do that part, or I can’t do that or I’m going to change it, or they simply won’t bid apples to apples.  That’s where you get confused and can’t figure out exactly how to set up the relationship with the contractor.  So, by using Volume XI Renovations, you’ve actually got everything you need.  By the way, we also include all the budgetary requirements for each room and each item – cabinets, appliances, everything that you can imagine, everything that’s needed in a house I’ve already identified and given you a place to budget each one of those items.

There’s also an overview.  There’s also a guideline that tells you what those things typically cost.  There’s also a curb appeal direction to tell you exactly what to do.  There’s a scenario that runs through the entire documents so you can know exactly how to fill them out and be guided all the way through.  It is exactly what we use in our renovation business.  There’s a lot of money that you can all make on renovations, but it’s only if you do them a certain way because you’ve got to protect yourself against the contractor who is the very one that’s going to help you make a lot of money on your renovation.  So, first things first; we’ve got to do our homework.  Secondly, once we’ve done our homework, we select our contractor and then they go under contract under our Independent Contractor Services Agreement.  That outlines exactly what the relationship is going to be.  We attach the scope of work to the Independent Contractor Services Agreement and that becomes an addendum or an exhibit to the contract.  Since you’ve already identified everything they’re supposed to do and how they’re going to get paid, everything is very clear on the whole deal.

That’s how we want to do business, Cindy.  It’s a great question; I think everybody learned from that one.  By the way, if you don’t have Renovations, be sure and call the office at 1-800-578-8580 and be sure and get that because it’s so much solves your renovation problems and your inspection problems with the property.  Now, if it’s a light inspection and you simply want to have a guideline to inspect the property, that is contained in your Book II of your Whole Enchilada Junior, Volume II. That does have an interior and an exterior guideline checklist for you to go through and make sure you have paid attention to everything as you go through the property and to allow you to make notes.  The renovation scope of work actually allows you to lay out the work to be done and it really guides you.  You can bring a contractor to get an estimate, but that’s all you’re going to get is an estimate.  One thing they love to do is just give you a number that you like, get involved in the transactions, start tearing things out, start making a big mess, and then start changing the deal on you.  Rather than do that, I want us to just work together and make sure it’s done right.

Now Caudrey ______ 20.06 has a question for me.

One of the most recent questions I have been facing from sellers is how am I going to be sure that you are going to keep your promise to make my mortgage payments after I deed my house to you? How best can one overcome this objection from sellers?

Caudrey, that is a fantastic question and one that comes up very often.  In fact, we’re doing a Millionaire Deal Maker the end of this month.  That’s our four-day, in-depth training on how to design, create and craft deals.  It’s March 27 through the 30th in Atlanta, and I highly recommend that everyone on this call be there because we go into detail on these kinds of things.  Not only “subject to,” but 35 different ways to structure a transaction, and 35 different ways to help make the offer.  It’s very exciting and there’re a lot of things that come from it.

Now, the best way to handle a “subject to” is to convince them that you’re the best solution you have.  It starts way back at the beginning where you first started to interview them.  You go through the process of finding out all the details using the Seller Questionnaire in the system.  You ask all the questions that we have on there.  You get comfortable with the numbers yourself that there’s a possibility there.  Once you see that there’s a possibility and they have agreed over the phone that they’re going to be pliable and they’re going to work with you and you’ve determined what their pain is, and you know that you’re going to be able to come up with a solution for that pain, then, you’re going to set up a meeting.  When you set up the meeting, I recommend that you have them go to your website and view and read your website so they have all the answers to questions that they might have.  That becomes your initial credibility kit.

Then, when you get there, I want you to go through the printed credibility kit that shows them exactly why it makes perfect sense to do business with you.  Then, after you get that process going, you’re going to work backwards on your Cost to Sell Worksheet.  When you come up with all the numbers, what they’re asking at the time and then minus all the expenses, we get to the final number.  That final number is your beginning point of the negotiation.

So, I laid all that groundwork to answer your question on subject two.  It’s a process of convincing them that you are not only credible, but that you actually have the solution to the problem.  How am I going to be sure that you are going to keep your promise to make my mortgage payments after I deed my house to you?  If you’ve done your job from a credibility standpoint, that question won’t even come up.  If it does, that’s no problem.  Say what would you like to do Mr. and Mrs. Jones?  I am a professional property manager.  I have a program to be able to fill properties.  In fact, I’ve already built a buyers list and we already have potential buyers to go into the property. By the way, if you’re hearing this for the first time, that is part of our system that you should build your own buyers list so that you do have customers for it.  Mr. and Mrs. Jones, what we’re going to do is move a customer in, we’re going to work with them to get their credit cleaned up and then they’re going to be able to buy their home.  I don’t know how long that’ll take, but in the meantime, they’re going to be paying rent.  That rent is going to be used to make your mortgage payments and we’re going to nurse our customer through the process until they finally do buy.

Now, if they come back now and say well, how does that mean you’re going to make my payment, you’ve got to get deeper and deeper and deeper.  Sometimes, you can answer a question without quite answering the question.  So, let’s say that they do, Caudrey, delve down and say absolutely I am not going to pass my property onto you unless you actually show me how you’re not going to, what am I going to do if you don’t make payments. Then, your next backup plan is to say well, here’s what I’ll do.  Let me go ahead and sign a deed back to you.  Let me put that deed in escrow.  If I ever don’t make the payments, I’m going to give you permission to get that deed.  I will be in default of my agreement with you and you can get the deed and get that property back.  Would that work for you? If they say how do I get the deed back, what’s my proof? Then, you say well, you can go ahead and record a mortgage against the property for $1, and then if I don’t make my payments, you can foreclose on that mortgage and you can get the property back. Or, a third party will bid it off at the courthouse steps and they will pay cash at the courthouse steps and you won’t have another thing to worry about.

Now, another idea, Caudrey, if they won’t give you the deed, is to back up to my Agreement for Deed Program.  This is the Agreement for Deed when you’re buying and this is in Volume X, Owner Financing. In Volume X, we’ve split up the business into two parts, buying versus selling, and there’s different paperwork for buying versus selling.  So, in this case we are buying using the Agreement for Deed concept so that’s the paperwork we want to use.  What that paperwork allows us to do is have them place their deed into escrow with again, you’re closing agent and you have what’s called an agreement for the deed.  They have the deed; you have the agreement for the deed.  If you do what you say you’re going to do, they have to give you the deed.  In fact, that deed is in escrow with a third party to make sure that you do get that deed if you do what you say you’re going to do.  That is a wonderful backup plan when anyone won’t give you “subject to.”

The final one, if they won’t do that one, is a lease with the option to buy.  You simply lease option the property then you put your customer in.  Then, when they buy, you exercise your option to buy and wipe them out.  Now, that’s covered in Volume IX, Lease Options. Again, it’s divided into two parts, buying versus selling and right now we’re talking about buying using a lease with the option to buy.  So, of course, we’ve got a weak lease and a very strong option so that you are in a position to win if you ever have a challenge.  Again, we have them place their deed into escrow so that you can’t be hurt if they back out.

Wonderful question, Caudrey.  I think a lot of people learned some valuable information with that question.

Bo Jespersen ______ 27.22, hello, Bo, from Maine, has a question.

I am a new member from Maine, and this is my first question.  Thank you in advance.  I have been really excited about “subject to’s” and have done two this year.  I have taken over the property in a trust as you described but naming the owner as beneficiary and then them assigning beneficial interest to me is my problem.  The way I do it, the deed gets recorded in my trust and that is the end of it.  If the loan is called due, I have some work to do, granted, but I haven’t hid my actions.  In your plan, if the loan is called due, you simply show the document that states the owner still has beneficial interest when really they do not, but isn’t that fraud?  I really enjoy your courses and enjoy “subject to’s” even more, but I must find a way to do it safely.  Please let me know what you think as soon as possible.  I plan to buy another one next week.

Well, Bo, here’s the deal.  I believe that it’s best to put yourself in a position to win and not lose.  So, I believe in the philosophy of belt and suspenders.  In other words, what’s the worst that could possibly happen, let’s go ahead and protect against it.  You know that one of my “Louisms” is “prevent the problem before it occurs.”  Part of my prevention process is to have all of the paperwork in line ready so that if you ever did have to show it, you would have it.

Now, let me let you in on a little secret.  I’ve never had to show it.  I’ve never had to show that the seller’s name was on the trust.  Let me back up, let me back up, that’s not true.  I have had situations where the lender, the new lender, for my new buyer wanted to see that the property was still in the seller’s name because of seasoning issues.  Because you do have that deed that shows that they did create the trust and that they were the beneficiary of that trust, then that actually solves the seasoning problem.  You want to use this sparingly and only when pushed to do so.  It’s not that we want to defraud any lender.  What we want to do is make sure that we are giving them a good, solid loan that will not fail, that payments will be made on and that’s the critical piece.  That these are good, solid loans that lenders want to make and the idea is that you have the flexibility to do anything you want to do because you planned in advance.

If you don’t want to use that technique, that’s quite alright with me, you just don’t use it.  If they were shown as the beneficiary, which is true, and meanwhile back at the ranch, the reason why that I do have them as beneficiary is because they’re going to sign some documents that would be fraudulent if you were the beneficiary.  One of those documents is appointing me as the manager.  The other is that they’ve placed their property in trust for estate planning purposes.  Both of those documents are very important to us if we ever have any problems down the road and to gain control over the mortgage and the payments of that mortgage.  Well, we can do so with the paperwork being in line and again, if they place their property into their trust when they signed those letters, they were still the controller of that trust and everything was true.  Then, after they sign all those documents, they do an assignment and quit claim of beneficial interest in trust and that’s when it goes not to you, Bo, but to your personal property trust.  That should be where it flows to.  Not to you but to another trust and that way you’ve got all of your bases covered.  Again, we want to do this in order to support lenders.

Remember that our motto is “We help people when we buy; we help people when we sell.  We help lenders when we buy; we help lenders when we sell.”  Can you just imagine after listening to what I was talking about with all the defaults and delinquent loans, can you just imagine what it would look like if all the loans that you and I and so many other folks on this call have reinstated if those hadn’t been reinstated; if instead those had fallen into foreclosure and bankruptcy.  Can you imagine how many more vacant properties there would be on the market?  Can you imagine how many more defaulted loans there would be, how many more foreclosures there would be, how many more bankruptcies there would be, and so on, and so on, and so on.  How many more communities would be affected by the vacancy by the dropping house prices, by the dumping of property and so on and so on?

You want to keep in mind that our real philosophy here is merely to deal with an issue that faces us but that our real plan is to do good business.  Otherwise, we’re not going to do the deal in the first place.

Alright, now we have a trust question from Edith Mock ______ 33.13, one of our Platinums, who says…

Hello, Lou.

Hi, Edith.

I need to create a personal property trust to be used as a business entity.  Help!  One, do I need a new TIN for this or can I use my “subject to” TIN?

The answer is well, let’s go ahead and read the rest of the questions here because this is a rather in-depth situation that you’ve got.

Number two; who is the trustee in this case?  Number three; what is the personal property trust asset, a business and the description would be the “what” since it is not the beneficial interest of a land trust?

I’ll explain that in just a moment.

Four, the beneficiary’s my LLC and then the living will.  Is that okay?

No, we’re going to start over.  None of that’s okay.  Here’s what I recommend.  First of all, a business is not really personal property.  A business is an operating entity.  Personal property is personal property.  Think of it this way; you’ve got a car, a boat, a trailer, a motor, a mobile home, a real estate note, those are all personal property and those can be held by a personal property trust.  A business on the other hand should be held by a business-type entity – a corporation, an LLC, a Limited Partnership, or a business trust.  There is such a thing called a business trust.  Now, what I’m going to recommend is that you hold your business in an LLC or a corporation because you’ve got the benefits of a subchapter-S with a corporation that can flow through to your personal tax return and it’s taxed at your personal rate.  Those are some benefits of using those entities.

Now, once that business is in that entity, then what we do is have the shares of…let’s say it was a corporation and we have the shares of the corporation held by guess what, the trust.  It’s not a living will as you said it would be a living trust.  A living will relates to your body parts and whether the machine keeps running if you’re dead sort of.  The living trust, on the other hand, is a place that we can put the shares of that corporation or that LLC.  I hope that makes sense.  That’s the best way to set that up.  Then, of course that eliminates some of your other questions like who should be the trustee.  In this case you wouldn’t have a trustee.  You’re going to have an entity instead.  Now, if you have an entity, you can have third parties as the registered agent of that LLC or corporation and then even keep your name off public record depending on the state that it’s established in.

Okay, whew, that was a powerful question and it’s just amazing that we’re covering such in-depth questions on your Group Q&A.  I hope you guys are getting value from this.  I think many of you would agree that this is probably not what you expected when you got our Group Q&A Program.  We have very detailed questions and very detailed answers to make sure that you get the full benefit of this.  So, what I try to do is some teaching along the way, not just to give you an answer but to teach you why it’s that answer.  Isn’t that the first thing that comes to your mind when somebody gives you an answer, your brain goes why?  So, I like to teach you in that way as well.

Now, Edward Mettle ______ 37.23 has a question.

After I graduated college, I had an internship where I learned about trusts.  I learned of a way to protect an asset where nobody could get to it.  It involves three trusts.  For example, let’s say the asset is an airplane.  Trust one would have the title to the airplane.  Trust two would put a lien on the plane for whatever amount.  Trust three would have a long-term lease for the use of the plane.  If the trust that held the plane were to get sued, the plaintiff could not get the plane because one, he would have to pay the lien from trust two and two, he would have to wait until trust three’s lease is up.

My question is with your trust paperwork, can we set up trusts to protect an asset in this fashion?

Well, funny you should ask that question, Edward, because the answer is absolutely, positively yes you can set yourself up just that way.  In fact, what you could do is set up three different personal property trusts, and in those personal property trusts it would actually have all the information that you need.  Now, here’s some good news.  Not only can you set up your personal property trusts the way you described and lien it the way you described, but you can also set up a bill of sale into the personal property trust.  You can do a certificate of transfer, trustee certificate of transfer.  You can do a, I’m just looking at some of the…oh, what’s this, a personal property trust equipment lease on page 97 of your Personal Property Workbook which is Volume V, of your Whole Enchilada Junior.  Right there is a personal property trust equipment lease.

Now, ladies and gentlemen, listen to me carefully.  What if your computer, isn’t that equipment, what if that were leased to your LLC?  Couldn’t your trust charge a fee for that and couldn’t it be paid for that, and wouldn’t that take it out of the ownership of that trust?  That’s exactly what it would do because the equipment would be owned by a different entity.  In this case, as Edward says, the third trust would be the one to actually have the lease, and the lease would go against or be paid by trust number one.  Trust number one that owns the airplane would lease it to trust number three.  Trust number three would owe the leased to trust number one, the owner of the plane.

What a great idea.  Actually, you’re going to see a whole write up of this on page 98 with an example and then it talks about the monthly payments, the deposit, the return of equipment to lessor, the lease period, the insurance, the lease right, and all these other goodies.  Then, of course, there’s a blank version, and it’s also on your forms disk.  We provide these things to you when you come to the MAS Training; the Maximum Asset Shield Training, too, and we go into some benefits there.

Yes, Edward, you’ve put your finger on exactly one of the great benefits of using trusts, and man, is that a powerful way to be able to totally protect your assets without having someone come along and steal them away from you.

Now, Caudrey has a question on notes.  He says:

I met a lady mortgage broker at the Real Estate Vestment Club who e-mailed me that she has a pool of non-performing notes.  One hundred and eighty million that can be purchased for between 30 to 50 cents plus three points, 30 to 50% I think is what you mean here, of the dollar plus three points.  Is this the same thing as bank REO properties or what?  Can you explain this to me?

Yes, Caudrey, I can.  There are two distinctions here.  When a note is held by a lender, that is an asset.  The lender doesn’t have the real estate, they have the note.  The note is collateralized by the real estate.  If the borrower defaults and they do a foreclosure, then the bank ends up with the real estate that was collateral for the note.  In this case, this person who has this for sale doesn’t have real estate, they have notes.  These notes may be performing notes or they may not be.  They may be some performing notes and some non-performing.  In other words defaulted notes and others aren’t.

What we have to do is pay attention to the type of risk that you’re getting into here because banks such as Acquin ______ 43.03 and some of the others that all of us have worked with so many times on short sales are actually buyers of notes at huge discounts.  So, what happens is, when they buy these notes at huge discounts, they can afford to do the short sales because they’ve got so many of these as I’ve proved to you at the beginning of this call, they’ve got so many of these that are not in default.  They’ve got 94 point something percent that are performing, so they can afford to take a hit on the junk that you’re calling them about.  It’s no big deal because they’ve already only paid 30 to 50 cents perhaps on the asset that you’re talking about.  They can afford to give you 30 cents off on the house and still make 20 cents.  Let’s say that they paid 50 cents for the note and they sell you the house for 30 cents on the dollar, they’ve made 20 cents on that deal.  That’s a lot when you’re talking about real money and not just pennies.  That can be a very good business, very good opportunity.

Now, I will advise you that you said that they’re non-performing notes, so in this case, you would have to do all the cleanup.  You would have to contact all of those borrowers.  You’d have to cut whatever deal you can with them.  You would either have to foreclose on the bad ones; you’d have to go through bankruptcy on others.  It would be a big mess and you have to be a real operation to do that.  The answer is if you give us the contact on that, you could get a commission from us through ASG which is our company AssetSolutionGroup.com, and Asset Solution Group is designed to do that very thing.  We broker and also act as principle on transactions like that so we can come in and take over that pool and either sell some or all of it to other people and then keep a commission in between or, take on some of the action and actually make the big markup in it.  So, definitely, that might be a good opportunity for you to do some brokering here, Caudrey, and send it on our way, and then we’ll definitely give you a commission on that.  Is that good news?  How about that?

Alright, by the way, while I’m on that topic, those of you who want to use good ol’ Lou as the bank, I don’t mind doing that, particularly if you’re Street Smart.  You do have to own my system.  I don’t waste time with people that are untrained, but we do have a set up for you to be able to partner deals with me.  If you have an interest in doing so, call my office at 1-800-578-8580 and we’ll give you access to a special website that allows you to post your property and all the details about that property.  You’d speak to Judy, my assistant in that area, and she helps with all the partnership deals and also the lending deals.

By the way, we’ll do either or.  If you want the money loaned to you on the deal, there is a monthly interest payment that you have to make.  If you want to partner on it, there’s no monthly interest payment that you have to make, but you have to give up 50% of your deal.  So, keep that in mind as you’re working out there.  You can either borrow money from us or you can partner with us on deals.  We’re more than happy to do that when you are Street Smart.  Of course you do have to qualify and of course the property had to qualify; that’s the most important thing.

We got a credit card question here from Joe Fister ______ 47.0 who says:

Hi, could you send me the form letter you came up with to increase your credit limit and decrease the interest charged.

Well, that’s a fascinating question, Joe, and let me just tell you that that is in your Millionaire Jumpstart Training Manual, your Event Manual that you got when you came to Millionaire Jumpstart Training.  It is, let me just see here, I’ve got a version right here in front of me.  I will give you what your credit line; it’s called the Street Smart Script to increase credit lines and decrease your interest rates.  That is in Roman numeral IX of your book, Millionaire Jumpstart. If you don’t have your Millionaire Jumpstart Training Manual, shame on you.  If you haven’t been to Millionaire Jumpstart, shame on you.  We’re going to be doing another one in April in Dallas, Texas, and I believe it’s April 19 and 20 in Dallas, Texas.  If any of you haven’t been to Jumpstart yet, by all means get yourself registered for it.  It’s a very important training and if you are a customer, in other words you have been to Jumpstart, by all means call the office 1-800-578-8580 and we’ll be glad to e-mail you the form itself.

If you haven’t had the experience of going through and actually, if you haven’t gone through the process of increasing your credit limits and decreasing the interest charged, then by all means you want to get that script and do it.  In fact, it’s part of your homework.  Before you come to Millionaire Jumpstart, we send it out to you in advance so that you have the opportunity to do that.  We do that to help you guys.  We do that to make your life much better because you can do so much if you can just lower your interest rates.  Most folks have no idea of the impact that interest has on your future and the impact of not getting interest has on your future.  So, by all means…and the impact of paying big interest and what that has on your future.  By all means, we want you to pay the lowest rates possible and have the highest available credit limits because that pumps up your business and supports your business.  It gives you a future with which to work with.

Now, Alice has a buying property question.

How do you adjust the price and pay the seller more for zero interest owner financing?  Part two, pertaining to the previous question, what percentage is still a good deal after doing the cost to sell?

Well, Alice, on part one, you’ve put your finger right on where the profit center is there.  Profit center is in the zero interest itself.  I just got through with a conversation about that interest rate and how it can impact your life.

Do a few examples if you will.

Let’s say that you borrowed $100,000 and let’s say you borrowed the $100,000 at 10% interest.  How much over the life of that loan would you pay in interest if, let’s say it was a 30-year loan and the interest rate were 10%, and let me ask you all a question.  I mean gosh, if a seller was going to carry back owner financing and you didn’t have to go to the bank, and you didn’t have to qualify for a loan, and you didn’t have to pay any points, and you didn’t have to pay any closing costs, and you were to borrow the $100,000 from the seller using their equity in the property where you don’t have to write a check, and you don’t have to go to the bank, and you don’t have to borrow the money, wouldn’t you do it?  It might make sense to if the interest rates make sense.  So, by all means, I would take a look at that.

Now, let’s say that you borrow money at $100,000 over 30 years at 10%.  Alice, that would mean the payment over the life of that loan would be $316,647.99, as opposed to you’re just buying the property for $100,000.  Now, do you see where the real benefit is?  The real benefit is in saving the interest.  In fact, you’re buying that house at a $216,000 discount and change.  Stay with me if you will, that’s your real discount.  What could you really afford to pay?  Oh my goodness, couldn’t’ you afford to pay even more than they were asking?  In fact, if the house is worth $100,000, couldn’t you afford to pay say $110,000?  You can do all kinds of gyrations with this number.  Let’s say that 10% is too high.  Let’s say it’s 6%, let’s say it’s 5%, it really doesn’t matter because the savings is still profound.  If you’re buying your discount with the financing itself, and remember that I teach that you are in the finance business, you’re not in the house business and it is the financing that we’re always going for.  Because you’re Street Smart, you now understand the impact and the true cost of interest.  Therefore, you cannot afford not to do it this way.

Part two of your question is pertaining to the previous question.  What percentage is still a good deal after doing the cost to sell?  I think you’re talking about a percentage of discount, but again, that really relies on what is it going to take to do the deal.  On one of my coaching calls today, as you know I do private consultation at our Gold level, and one of the calls today was Lou, is this a good deal?  We went through a first mortgage, a second mortgage and what he was paying for the property versus having to lay out $5000 cash.  When we were all done with the transaction, it made perfect sense because he was taking over a 5.5% interest rate loan and he was being able to get a $50,000 equity all by paying out that, well, actually the number was $7000 because he started at $5000 and the seller said no, absolutely not and the seller would only do it for $10,000.  So, he said okay, here’s what we can do.  We can pay you $5000 now and $5000 when the property sells.  Or, we can pay you $7000 cash.  Which would you prefer?  She went for the $7000 cash.  Now, wouldn’t you?  As a buyer’s property do that deal when there’s $50,000 equity?

Now, these are some of the things that we teach you at the Millionaire Deal Maker.  Listen; if you haven’t been to MDM, you absolutely, positively need to be there.  We cover so much in those four days.  It is jam choco blot ______ 55.04 packed full of information for the whole event.  I’m telling you that you will hear things that you have never thought of before, and let me just ask you a question.  Isn’t it true that you don’t know what you don’t know?  It’s absolutely the truth when it comes to how to structure deals, what to say to sellers, how to get them to do what you want them to do, and how you’re able to make money where other people don’t.  I walk in behind other investors all the time, and it’s amazing what I’m able to do that they never thought of before only because they were lacking the training.  So, I want to give you that training.  I want to give you what I’ve learned over my 30+ years of being in this business and let you know exactly the insider secrets of what to say and exactly how to say it in order to get the seller to say yes.  Is that a “Yeah, Baby!”  Yeah, baby!  So, you be sure and get yourself to the Millionaire Deal Maker which is March 27 through the 30th.  We’re running a special right now, so you want to call the office at 1-800-578-8580 and get yourself registered.

Now, Mel has a question.

How do I buy an RTC house?

Well, RTC was Resolution Trust Corporation and that corporation, Mel, shut down over 20 years ago.  That corporation was created by the United States Federal Government for the sole purpose of liquidating assets that had been taken over by savings and loans that were now defunct.  What they did was start to liquidate those properties and they created a corporation to do that purpose.  It was a huge, huge problem at the time and we’ve got the same one today, only maybe a bit worse than we had it back then.  Yes, I was around for that time and yes, it was a wonderful time to be in this business.

You’ll see this will be an absolute banner year; this will be golden ages wonderful times you’ll look back on with absolute wonder and excitement at what the opportunity is that’s facing you right now.  That’s why I want you to be so focused on your buying and structuring deals the right way so that you can make money that other people simply don’t make.

The next question is from Valerie.

Will the dumping of REOs ever lower the general level of real estate values significantly?

Well, Valerie, it’s very unlikely.  First of all, dumping is only going to happen in certain spot markets and those spot markets are going to be ones that had huge run ups.  They’re the ones that are going to be most affected by this drop, but even then, it’s doubtful that the values will drop back down to what they were at the time of the run up.  There will be some retreat.  It’s sort of like an ebb tide.  The tide comes in and it retreats back so there will be some retreat but it won’t be nearly what the original values were before the start up or the run up rather.  That’s exactly how I want you to think of this, that there’s going to be some spot depressions around the country but other parts of the country are just going to be fine, thank you very much.

Today, I’ve had a series of six different coaching calls with Gold students, with our Gold clients, and to the person they were having great success with filling their properties.  The reason is because they’re following the system.  Several of them had filled like five to seven properties in the last month.  There is a market out there of potential buyers.  There is a market of people with down payment money and the better quality properties you deal with, guess what, the better quality client you get with more money down.  Those are the kind of houses we want to focus on.  Those are the kind of markets we want to focus on.  You’ll see you’re going to be able to get great properties in great markets.

Well, let me just try to squeeze in one more here.  We’ve got a question from Jerome.

Websites.  Is compWIZ included in the price of your website, or is there an extra charge?

The answer is Jerome, there is an extra charge for compWIZ so, if you have our Buying, Selling, and Borrowing websites, then they do help you analyze the deal, keep up with the deal, keep up with all your communications with the customer, keep up with everything related to your lead.  Help you also give yourself a very good credibility position on the front side of the website where the customers see who you are, what you do, and how you operate.  On the back side is where you can really keep up with all y our deals.  We offer you a tool there that you can actually click the button right there and analyze the comps on your property.  It’s called compWIZ and there’s a separate fee of $59.95 per month, but the good news is that it’s not one county or two counties.  It’s the entire United States.  Wherever data is available, your compWIZ is available, and you’re able to get some great information on the property, on the location, all kinds of great stuff as well as all the comparables in the neighborhood, their proximity, all kinds of good stuff.  So, yes, that helps you.

You’ve heard a lot of great information on today’s call I hope and I’m planning for you to be able to use this stuff as soon as possible.  We delved down in some deep questions from Marsha and from Bo and from Caudrey and several others that came up with such brilliant questions, and I definitely want you to review this over and over again.  We do upload this to the Internet.  You can download it to your MP3 and listen to it.  Those of you who are members of our Trio Program or want to become members of our Trio…