Who’s on First?

Understanding the players in an owner financed transaction makes for profitable relationships. Here we explore the four primary team members along with common industry terminology.   Read more

5 Reasons Sellers Offer Owner Financing

Why would a seller allow a buyer to make payments over time for the purchase of property?  Here are five reasons sellers consider financing property rather than requiring the buyer to obtain a bank loan: Read more

Real Deal #137 – Condo in Florida

Welcome to Real Deals!  It’s always easier to learn from real life so here we share information from actual owner financed transactions.

A developer successfully completed a nine-unit condominium building and sold Read more

What is Note Seasoning?

“Seasoning” is the term used to describe the amount of time the payer has been making payments. The general rule of thumb is the longer the better, with 12 months or more optimal. That is not to say that a note won’t be sold unless there is a lot of seasoning. It just means the investor will be looking at other variables of the deal that minimize risk. Read more

What Changes for the Payer?

“So if I sell my private mortgage note, what changes for the Payer?”

This is a common question with a simple answer. 

Nothing changes for the payer except where they mail the payment. When a note is sold, the terms of the note remain the same. 

The payment amount, interest rate, and due dates remain the same. If there is a balloon payment or “bump” payments, they also remain the same. 

An investor purchases the note “subject to” the terms and conditions of the note signed by the payer.   The only way any terms could be changed would be with a written modification signed by all parties (the payer and the holder).

The Fair Credit Act

One question that is continually posed in this business is whether a cash flow investor has the legal right to access a person’s credit file prior to purchasing a debt instrument. 

The rights of consumers are protected under The Federal Fair Credit Reporting Act (“Act”). Originally passed by Congress in 1970 and substantially overhauled in 1997, the Act regulates acceptable practices with respect to credit information, which is gathered and sold by Consumer Reporting Agencies. The Act is enforced by the Federal Trade Commission and carries stiff penalties for noncompliance ranging from monetary fines to imprisonment. Read more

Broker Fees – Too Much or Not Enough?

Negotiating the purchase of a cash flow is about providing a service to sellers desiring cash rather than payments over time. While providing an essential service, the cash flow industry is also a for profit business. Cash flow brokers earn their profit through fees or spreads resulting from the difference between the price the seller agrees to accept and the amount an investor will pay. But how are these fees determined? Read more

What is “Face Rate” of a Note?

“Face rate” simply refers to the interest rate that is being charged on the note. Typically seller-financed notes are written between 8 percent – 12 percent. 

The higher the interest rate, the more valuable the note to an investor. Read more

What is Seller Financing?

When a seller allows a buyer to make payments over time for the purchase of property, it is known as owner financing or seller financing. Read more