Finding Cash Flow Notes – Does It Help To Get Social?

It seems you can’t make a move today without being reminded of the surge of “social media” outlets. But do these outlets actually help anyone do business?

What about finding cash flow notes?

First off, let’s look at some of the top social media sites in 2010 (in no particular order).

YouTube  -  Twitter  -  Flickr  -  Digg  -  Facebook  -  Del.icio.us  -  Propeller

Reddit  -  Metacafe  -  Technorati  -  StumbleUpon  -  LinkedIn  -  Mixx  -  Slashdot

My Space -  Class Mates  -  LiveJournal  -  Yahoo 360  -  Scribd

Blogger  -  WordPress  -  MSN Groups

Wow, where do you start?

There are really over 100 social media sites that have “significant traffic.” But you certainly don’t have the time to check them all out. Here are a couple that we think deserve your attention.

1.     LinkedIn – Touted as the “business” option for social media, you can connect with colleagues, clients, and prospects. You can send and receive emails as well as create and join groups.  Think business networking groups in an online environment.

2.     YouTube – Great venue for sharing videos and a low price (how is free for low?). Be sure to allow people to re-post your video on their site if they want to share.

3.     Facebook  – Ever since the addition of Fan Pages and Groups, Facebook has become a potential melting pot of information. If you use the “group” function you can also email people (within Facebook) directly. A great way to let them know what you are doing.

4.     Twitter – Short messages to a group of “followers.” This venue gives the user and opportunity to add a personal touch. Just don’t go too far – no one cares what you had for lunch. Send out more than 4-6 updates per day and you will probably find your followers start to ditch you – especially if you are doing nothing but selling them.

Although the jury is still out on how many actual deals you can get from social media, there is no question that it will be here for awhile and millions of people are interacting in this venue.

In all cases, you want to be sure that you are delivering useful content, not just a sales pitch (some sites will even have rules against you doing just that). Contribute solid information and you just may find yourself sought out when it comes to buying owner financed notes!

Buying and Selling Notes – What is the Current Property Value?

One of the considerations when buying and selling mortgage notes is knowing the current value of the home. After all, the property is the collateral and knowing its true value will greatly affect how much an investor will pay for a note.

Historically this process was a bit easier, when everything was in an “up” market.  But with property values still on the downside or just recovering, it is often difficult to put a (safe) number on it. At least one that everyone agrees on.

Although there are excellent programs on the Internet that help the average consumer to get an idea of value, they are not always accurate. The actual value of a property can be determined in a couple of credible ways.

Often, note investors get what they call a “drive by” appraisal or valuation.

Usually performed by a licensed appraiser, the report will  include other sales or comps in the area. The main difference is a “drive- by” evaluation does not require the appraiser to have access to the interior of the property. The appraiser actually drives by and takes pictures from the street for the report.

Some investors are using what is called a Broker Price Opinion (BPO) – an evaluation based on the advice of a real estate agent or broker. They are often very similar comparable to a “drive by” and at a lower cost but do not follow the strict guidelines of a certified appraiser.

The note buyer may even require a full interior appraisal to get comfortable with the value. This might be the case when there are substantial improvements to verify or there’s concern over the property condition.

The actual approved or preferred method will be up to the individual investor.  While they are buying the mortgage note and not the property itself, the value is still important in deciding risk, investment to value (ITV), and the price they will pay to purchase the remaining payments.

Questions on Selling Mortgage Notes

Owner financing is on the rise with more sellers agreeing to accept payments from buyers. There are many reasons people agree to a carry-back real estate notes including:

• Quick sale of the property
• Monthly income from the note
• No hassles of bank financing
• More qualified buyers
• Property that is hard to sell or finance

Rather than waiting 20-30 years for payments, many sellers opt to sell future payments to a Note Buyer. Here are the seven most common questions we receive on selling mortgage notes and trust deeds.

Why Would I Sell My Mortgage Note?

Circumstances change and many sellers would prefer cash today rather than small payments that trickle in each month. Here are just a few reasons people have sold their note for cash:

• Retirement
• Taxes
• Investment Opportunity
• Expensive Medical Care
• Vacation
• College Tuition
• Unexpected Financial Changes
• Peace of Mind – no more worrying if the buyer is going to miss payments or having to foreclose
• Accounting headaches, IRS regulations, paperwork hassles, and the list goes on…

What Is A Note Appraisal?

A note appraisal reflects the current market value of your payments similar to what a real estate appraisal provides for real property. Frequently referred to as a “quote” it shows what your future payments are worth to an investor in cash dollars today. We recommend having it evaluated once a year as pricing may change based on market conditions.

How Do I Maintain the Value of My Note?

Many of the items that affect the value were determined at the time the property was sold. However, keeping good records of the payments received and requiring the buyer to provide annual proof of current taxes and property insurance will help maintain the value of your important asset.

Can I Sell Just Part Of My Promissory Note?

Investors can purchase all or part of the remaining payments. Selling part of the payments allows you to receive a lump sum of cash up front, then payments when the note reverts back to you.

To minimize the discount, many people elect to sell just enough payments to meet their cash needs today and keep some of the future payments as an investment or nest egg. Always ask for an option that meets your needs.

How Is The Value Determined?

The value of a note is affected by the down payment, interest rate, payment amount, length of repayment, buyer’s credit rating, and payment history. The type, condition, and value of the property also impact the value of your note.

The time value of money, which makes payments due now more valuable than payments due in 20 to 30 years, is also factored into the offer. Due to inflation, money in your pocket today is generally worth more now than later. All of these elements will be taken into consideration in determining the current value of your note.

How Will Selling My Note Affect The Payer?

The payer or buyer experiences no change in the way the payments are structured. The only change will be the address where the payments are mailed.

How Do I Get Started?

The first step is to obtain a quote from a note buyer. The investor will ask some questions on the property sale and terms of the promissory note. This can usually be done over the phone or by completing an online worksheet. The investor may also request copies of the documents relating to your transaction, such as:

• Promissory Note
• Mortgage (or a Trust Deed, or Land Contract in some states)
• Closing statement
• Buyer information
• Pay history and current balance
• Previous title insurance policy
• Current hazard insurance policy

The investor will provide an offer subject to the standard title, appraisal, and buyer’s credit review. Once the review is finished and the documents gathered the transaction is reading for closing.  This process typically takes 2-4 weeks.  If preferred, an attorney or title company can handle the exchange of funds for the original closing documents.

Grab your copy of the Note Buyer List today!

Owner Financing Made Easy For Sellers and Home Buyers

There is a new site connecting sellers and buyers that want to use owner financing. Note Investor caught up with Fernando Sanchez, founder, and asked him to share his vision.  He explains how his site can help homeowners that want to offer seller financing and take back a real estate note. Read more

Dodd-Frank Hijacks Owner Financing

Private property owners have been swept into the regulations of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act which was signed into law in July 2010. Owner financing will be regulated in Title XIV Section 1401(2) (E) Mortgage Loan Origination Standards. The law restricts private property owners who want to sell their own property using owner financing (installment sale). These are some of the consequences.

Homeowners die before Read more

Selling Mortgage Notes – Where Have All The Simos Gone?

This month’s owner financing real deal comes from our email inbox. Chances are this simultaneous closing question has been on your mind too.

Question: I’m a rehabber in Florida and would like to have a company Read more

Why Sell My Mortgage Note?

Owner financing seemed like a good idea at the time. Let the buyer make payments and get the property sold. After all the seller carry back is known for attracting purchasers and providing quick closings, without the hassles or fees of a conventional bank loan.

But circumstances change and many sellers would prefer a lump sum of cash today rather than monthly payments that trickle in over the next 10, 20, or 30 years.

If you are receiving payments on a mortgage, trust deed, or contract there are investors eager to purchase all or part of the future payments. Note buyers run ads and mail postcards leading many to wonder,

“Should I sell my mortgage note?”

Here’s a look at the top 5 reasons people sell mortgage notes:

1. Pay Bills

Reduce debt or pay expenses including medical bills, college tuition, credit card balances, and home repairs. Pay down a home loan or payoff an existing mortgage on the property sold.

2. Peace of Mind

Eliminate the hassles of paperwork, payment collections, and IRS reporting. No more monthly worries wondering if the buyer will:

• Make payments on time
• Take care of the property
• Pay taxes and insurance
• File bankruptcy, or
• Go into foreclosure

3. Make an Investment

Start a new business, fund an IRA or retirement account, buy another piece of real estate, or make a profitable investment.

4. Settle an Estate, Divorce, or Partnership

Distribute partial ownerships or settle disputes for notes involved with an estate, probate, dissolution of marriage, bankruptcy, partnership, or other entity.

5. Enjoy Life

Take a dream vacation, fulfill a passion, enjoy retirement or buy a new car, boat or RV.

Know Your Options When Selling Mortgage Notes

You don’t have to sell the entire cash flow. Depending on the goals, selling just a portion of the payments might be a preferred choice.

Investors are willing to purchase a certain amount of each payment (say $500 per month out of a $1,000 payment) or just some of the payments (say the next 5 years out of the remaining 30).

Known as a partial purchase, this provides access to some of the cash now with interest and payments still accumulating for future use. It also helps minimize the discount since the payments due sooner are worth more to an investor.

Selling a note is not the right answer for everyone. There’s a potential loss of interest income and tax benefits. Some high-risk notes just won’t be marketable for a price that makes sense.

However, it pays to know your options. Most investors are willing to provide a no cost no obligation quote for review with a CPA or attorney to help find the best solution for your personal situation.

Wondering how to reduce the discount and sell your mortgage or trust deed for top dollar pricing?  Be sure to grab your copy of 21 Insider Secrets You Must Know Before Selling an Owner Financed Note, provided as a free bonus with any purchase of the Note Buyers Directory.

Note Buyers Demand Original Promissory Note

In an effort to hang on to homes in foreclosure many owners are telling banks to, “Show Me the Note!”

It looks like Wall Street lenders are learning something private note buyers have known for years…

When buying and selling mortgages or trust deeds you need to get the original promissory note!

Put it in a safe place where it won’t get lost and make sure it comes with endorsements and assignments that follow the chain of ownership. You know, something that proves you own what you say you own.

It’s one of those things you don’t think about until you need it. One of those times happens to be when the buyer or borrower stops making payments.

In order to foreclose a Note Buyer must prove:

• the existence of the note
• the party being sued for foreclosure signed the note
• they are the owner or holder of the note in due course; and
• a certain balance is due and owing.

What does that mean in plain English?

Well, the promissory note is an obligation to pay, kind of like a check. If you want to cash the check you have to present it to the bank. If you want somebody else to get payment then you have to endorse and sign it on the back.

As banks bought and sold mortgages during the securitization craze many notes were lost or transferred without accurate paperwork. Lenders would then rectify the problem by substituting an affidavit of lost note. For many years the courts would routinely overlook missing paperwork or accept the affidavits when granting foreclosures.

But then the bubble burst, the real estate market came crashing down, and foreclosures skyrocketed. Disgruntled homeowners and consumer advocates started demanding lenders produce the note in an effort to stop foreclosure.

This movement scored its first big success in Ohio back in 2007 when a federal judge denied 14 foreclosures by Deutsche Bank National Trust Co. because the bank didn’t produce the original notes.

Since that time homeowners and attorneys have used this delay tactic at an alarming rate. They’ve also extended claims to other mishandled paperwork, contributing to the temporary foreclosure freeze announced by Bank of America, GMAC, and Chase in October 2010.

So what does this all mean to the cash flow business?

If you are a Seller that accepts owner financing be sure to protect yourself by keeping the original note in a safe place. If you are a Note Broker, verify the seller or a third party servicing agent is in possession of the document so it can be produced at closing. Note Investors will continue to be diligent in requiring the original in order to buy mortgage notes.

Click Here for a list of Note Buyers and Owner Financing Specialists!

Note Buyers – Linked In or Whacked Out?

LinkedIn has been called the Facebook for businesspeople. I have a profile there, but I rarely check it, and requests to make a connection (similar to ‘friending’ someone on Facebook) from people I know may sit for months before I notice them. Nonetheless, I occasionally browse my ‘groups’ to see if anything of interest is happening and if people are really putting deals together online.

What I’ve found is a tiny bit of e-commerce and a mega-dose of megalomania. There are a few people who are ‘real players’ trying to expand their reach and grow their database, and many more who, poetically speaking, doth hurl vast quantities of excrement on thee olde message boards to see what might sticketh. Almost as bad are the self-proclaimed message board cops, who apparently have nothing better to do than question the credentials of everyone else who posts.

The former (excrement hurlers, or EH for short) are Read more

Find Cash Flow Notes with Note Seller Lists

What does it take to be an expert in finding real estate notes?

We’re pretty sure mailing 50,000 note holders per month qualifies.  Get all the details in our exclusive Note Investor (NI) interview with Scott Arpan of Advanced Seller Data Services (ASDS). Read more

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