Rich Dad Poor Dad Question?

[Gary Landon]

In the chapter “The Rich Invent Money”, he gives an example of buying a house for $20,000 and selling it on a note for $60,000. I assume he has a mortgage from a lender for the $20,000. My question is how does the note work with the mortgage?Do the buyers pay him on the note and he pays the lender and who actually owns the property?

[Jay Hinrichs]

@Gary Landon 

  you buy the property for 30k put 10k down and the seller takes back a first ... for 20k then you resell the home for 60k as in your example.. and the new buyer puts 10k down and you craeate either an all inclusive Deed of Trust  ( California specific document) or simply a second DT or mortgage for 50k... payments on the first are 200... payments on the second from your buyer are 500... you keep the delta... of 300..00  this is called a sandwich, or a wrap etc.  YOU are responsible for paying the first...

The reason the All inclusive works so well is that if for some reason you don't pay the first and they file an NOD your buyer is notified as the all inclusive has a NOD notification clause. Then your buyer has the right to make the payments direct and foreclose your position out.. and buy the property for the amount of the underlying Note.. Every state has a different twist on it. of course