Don’t pay a cent event

Ever wonder how retailers offer clients those “don’t pay a cent events” until sometime next year?

Man, they must starve. 

Well, not quite.

Once they’ve sold you, say, $5,000 worth of new furniture, and gotten your signature on a piece of paper (which, by the way, if you bother to read the fine print, allows them to check your credit score), they sell that contract to a credit card company or financial leasing firm even before you’ve left the premises.

So they get paid right away. Albeit, at a discount. Those finance companies buy those contracts for less than face value, which is, of course, where they make their dough (via the “spread” or vig/vigorish).

Not enough small enterprises provide their clients with financing. I encourage them to line up this kind of financing with their bank or a lease finance company; there are plenty around who’ll do it.

Here’s how it would work for a roofing company I was talking to a few months ago. I’ll call them “Acme Roofing” for now:

-client buys a new $8,000 roof from Acme Roofing 
-pays say a 10% deposit of $800
-signs contract
–

Acme or Acme’s finance company registers a PPSA (personal property security act) registration on their property to secure the balance
-client pays balance at say $600 a month for 13 months
-total paid by client? $8,600 so Acme or Acme’s finance company is actually getting some more interest
-after last pmt, PPSA is released
-Acme can sell the contract to a finance company for cash on day 1 if they want to or keep it
-this would expand Acme’s client base, I believe.

There is nothing that destroys value
faster in real estate than water (other than fire, earthquake and tornado, that
is) so if your roof leaks, fix it right away—no deferred maintenance please.

I mean if you owned a $400,000 Lamborghini
Aventador, wouldn’t you take care of it? Sure you would, so why not your
$400,000 house, which needs a new $8,000 roof?

Bruce M Firestone, B Eng (civil), M Eng-Sci, PhD, ROYAL LePAGE Performance Realty broker, Ottawa Senators founder, Real Estate Investment and Business coach 1-613-762-8884 bruce.firestone@century21.ca twitter.com/ProfBruce profbruce.tumblr.com/archive brucemfirestone.com

MAKING IMPOSSIBLE POSSIBLE

postscript: I really like the roofing business. One reason–it ain’t that hard to find new clients. Just walk any neighborhood older than 15 years, and look up.