Cleaning out my house and I found……….

[Don Konipol]

Old tapes from a Jimmy Napier seminar, marked 1981!.  Don’t have a tape player so can’t play them, but later I found the “workbook” that goes with it.  So I took some time to read the workbook as this is what got me started investing in notes.

While much of the advice may be outdated, ("place a small box ad in the classified section of your local newspaper"), Jimmy's advice on "working a note" is as true and profitable today as it ever was. Well, maybe not QUITE as profitable as when mortgage rates were 16%. Basically, his "working " a note consists of offering the borrower an incentive to agree to change the note payments in a way that increases your ROI. So, for instance one of his favorite plays is to offer to "half" the interest rate if the borrower doubles the monthly payments. If you purchased the note at a large discount, this will increase your ROI significantly because you're collecting the "discount" so much quicker. Of course if you paid par or near par (unpaid balance) for the note then most plays will not work.
Jimmy then suggests that if the borrower is not interested in making any changes, you can trade the note for real property, with the note being valued at full unpaid balance, while it cost you say 60% of that.  Later you can sell the property you traded for at a 10-15% discount, and have earned 40-50% ROI in less than a year, plus perhaps collected some interest payments or property rent payments.

When Jimmy told me about this ( I think it was 1982), I remember telling him that this wasTHEORY, it would be much more difficult to pull off in reality.  Jimmy being Jimmy got on the phone and 30 minutes later found me to tell me that there was a meeting of the Society of Exchange Counselors in Las Vegas the next week and he had gotten him and I invited.  So, long story short we drive out to Vegas and attend the exchange meeting.  Jimmy announces he has notes for sale, and gets some trade offers, of basically what we used to charitably describe as “recreational” lots.  So Jimmy then changes his offering and offers his notes, at full face (unpaid balance) AND adds a small amount of cash as a sweetener.  He ends up getting multiple trade offers, and trades his note and some cash for a small apartment complex, subject to a existing first lien, a couple of “tradable” (worthless) lots, and two mobile homes (Jimmy calls them “Wobley Boxes) on a tract of land.  Alas, this is only the beginning of Jimmy’s trading.  He not only trades during the sessions, he’s also making deals in the bar most of the night (“the best time to strike a deal is when the other guy is happy”).  I’m still not sure how it happened, but by the time we leave the meetings Jimmy owns a recreational vehicle, 4 acres of Florida swamp, a free and clear 4 plex fully occupied, and all of his notes back.  He’s out $12,000 cash, and figures he has gained assets with a liquidation value of about $45K.

I’ve tried to duplicate the exchange thing a number of times, but it seemed like (1) I was seldom offered anything worth having or (2) the deals I did put together fell thru and never closed.  As a side note Jimmy told me that I was too concerned with the initial trade; that the real money was made “down the line”.  

I’ve often thought of Jimmy Napier through the years.  Yeah, he was a guru, but one that lived what he taught.  I think if I remember correctly he sold his “system” for $199, and if you paid that he’d give you his home phone number and you could call him for advice, LOL.  BEST $199 I EVER SPENT!