financing secrets of a millionaire real estate investor.pdf

80 FINANCING SECRETS OF A MILLIONAIRE REAL ESTATE INVESTOR
FIGURE 5.3 Blanket Mortgage
Single
Promissory Note
Blanket
Mortgage on
all Properties
Investor
Lender
If you have other property with equity, even raw land, you can
offer this property as additional security for the loan. Be cautious,
however, with offering your personal residence as security; failure to
make payments can make you homeless!
Using Bonds as Additional Collateral
A bond, like a note, is a debt instrument. In return for the loan,
the investor is paid in full at a future date. Bonds generally pay interest
at fixed periods, unless they are zero-coupon bonds. The cash value
of a bond at any given time is based on the maturity date and its
present value, which in turn is based on whether investors are speculating
interest rates will rise or fall in the future. As interest rates fall,
bond prices rise, and vice-versa. And, logically, the later the maturity
date, the less the present value of the bond.
Municipal and government bonds are virtually the same as cash;
they can be traded, sold, and hypothecated (used as collateral). U.S.
Treasury bonds are safe, secure investments from a risk standpoint.