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Don't Consider Bankruptcy

Bankruptcy is a morbid subject, but there are a lot of investors that have been hurt by unforeseeable circumstances. Negative cash flows, vacancies, credit card debt and negative equities are not a hopeless situation. Some causes of these come from lowering rent, property values decreasing, high vacancy or long term vacancy, paying too much for properties, extensive repairs or damage, over-extended credit, or foolish purchases. These problems are not terminal. Don't give up, hang in there.

Talk to your lender � the banker does not like to foreclose. Ask him how he feels about the security of his loan and see if he would like better collateral. See if he would like to substitute collateral, provided it meets his approval and puts him in a much better situation. If approached in the right way, most bankers will listen.

There is something called a discounted mortgage market that few people are aware of. The basis of this market is the purchase and sale of privately held mortgages secured by real estate. These mortgages are usually created in the sale of a property between 2 parties and sell at a discount at a later date. The discounts range from 20% � 50% depending on the terms and the length of the note. In other words, in the discounted mortgage market you can find a privately held note that is similar to the 60k loan with the banker and purchase it at a lower discount. A 40% discount 60k in notes could be purchased for 36k. Using the discounted substitution technique, it is possible to pay off the 60k loan for 36k.

Find the cash needed to buy the note. If the lender agrees to take another note as collateral then the original property will be free of that loan and the funds could be obtained by financing that property. If getting the loan is a problem, there are plenty of profit margins to allow bringing in an investor the help finance the deal. The purchase of the note, refinance of the property and substitution of collateral can all close on the same day.

Change your attitude, move on and be focused on profits and not problems. If there are other problems to be solved, then take a renewed determination and optimism into solving it.

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