Wraparounds with Underlying Liens
November 19, 2008 by Tracy Z · 2 Comments
When people go to sell their home, the majority will still owe money on a loan from when they bought the property. Since few sellers own a property free and clear, what to do with this underlying lien is an important consideration with owner financing.
Temporary Seller Financing
November 5, 2008 by Tracy Z · Leave a Comment
Who wants to wait for the monthly note payments to trickle in over the next 5, 15, or 30 years? It makes sense that more sellers would be willing to carry back owner financing for the buyer if they knew how to sell all or part of their note for cash shortly after closing. Read more
What the Federal Bailout Means to Seller Financing
Worried about the effect of toxic mortgages on the overall economy, the Federal government is pulling out the checkbook to help bailout failing mortgage companies. It started with Fannie Mae and Freddie Mac and now includes a proposal for another $700 billion infusion of funds. Why is the government involved and what does it mean for seller financing? Read more
Finding Mortgage Notes with Reverse Ad Marketing
September 24, 2008 by Tracy Z · 3 Comments
Many cash flow professionals are familiar with placing advertisements offering to purchase notes yet few take advantage of a technique we call Reverse Ad Marketing. This is one of our favorite note marketing methods based on the simplicity, effectiveness, and minimal cost.Essentially, potential clients are paying the marketing cost by placing their own ads offering property for sale. You just need to identify and respond to the ad! Read more
Moneymaking Opportunities with Notes!
August 18, 2008 by Tracy Z · Leave a Comment
Whether a seller, investor, or note broker, there are many opportunities to make money with owner financed or seller carry back notes. There is a lucrative secondary market for seller financed notes also known as the paper business. Here are a few of the most common ways people make money in the note business.
Maximize Selling Profits
A seller often takes back financing for a buyer to appeal to a larger group of buyers and maximize the sale price. A property seller may also elect to take back a portion of the sale price for long-term interest income. Why should the banks make all the money?
Did you realize that a bank earns back almost 2.5 times the loan amount on an average $100,000 loan at 7.5% that runs for a full term of 30 years? The payment would be $699.21 based on a 360 month amortization which means the buyer will pay back over $251,715.60 after 30 years on the $100,000 loan. All due to the power of interest!
Referral Fees
A note broker or note consultant earns a referral fee by acting as a financial middleman between a note seller and a note investor. A note broker markets to note holders offering to help them liquidate their note payments for cash today. The note broker then connects the note seller with a note investor, earning a fee at closing. This fee can range from hundreds to several thousands of dollars depending on the size of the note and their relationship with the investor.
Interest Income
Investors purchase notes for the interest income. First an investor can earn the interest rate or face rate charged on the note. An investor can further increase their return by buying the note at a discount. For example if a note has a balance of $25,000 at 8% interest the investor can offer less than $25,000 to purchase the note for a return of 10% or more. The greater the discount the more the return is increased!
Rather than holding for long-term interest income, an investor might also purchase a note at a discount and then resell at a later date for a profit. This is often accomplished by combining several notes together in a group or portfolio selling at a higher price to a larger bulk investor.
Learn More About The Note Business
If you would like to learn more about being an investor or note broker you will also enjoy the following:
Learn the Note Business in 60 Seconds? – OK, you can’t really learn the cash flow note business in just 60 seconds, but this “speed round” of 11 questions will certainly get you started.
5 Myths About the Cash Flow Notes Business – I want to have a very candid conversation about working in the cash flow notes business. Just what it is, how you may be part of it, and some common myths and facts.
How Can I Find Cash Flow Notes – Knowing how to find cash flow notes is the most important skill note brokers can learn. It can also be the most difficult.
Finding Cash Flow Notes Training Videos – Watch this series of free training videos including 5 Ways to Find Cash Flow Notes.
