How Can I Find Cash Flow Notes?

Knowing how to find cash flow notes is the most important skill note brokers and buyers can learn.

It can also be the most difficult. Why?

Well it can seem a lot like looking for the proverbial needle in a haystack.

Read more

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

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.

Safe Act and HR 4173 Update – Is it Good News for Seller Financing?

A new law exempts up to 3 seller-financed transactions in a 12-month period from mortgage originator licensing requirements. Bill HR 1473, now known as the Dodd-Frank Wall Street Reform and Consumer Protections Act, was signed into Public Law No: 111-203 on July 21, 2010.

A loud outcry was heard across the nation from real estate owners, investors, and note buyers on any restrictions that would limit sellers from using owner financing on property they owned.

It seems the lawmakers have listened… well, sort of.

The changes probably fall into the category of “something is better than nothing.” You can read the new language below and be the judge.

Excerpt pertaining to exemptions from Mortgage Originator definitions in:

HR 4173 Dodd-Frank Wall Street Reform Act

TITLE XIV–MORTGAGE REFORM AND ANTI-PREDATORY LENDING

Subtitle A–Residential Mortgage Loan Origination Standards, SEC. 1401. (2)(E)

(E) does not include, with respect to a residential mortgage loan, a person, estate, or trust that provides mortgage financing for the sale of 3 properties in any 12-month period to purchasers of such properties, each of which is owned by such person, estate, or trust and serves as security for the loan, provided that such loan–

(i) is not made by a person, estate, or trust that has constructed, or acted as a contractor for the construction of, a residence on the property in the ordinary course of business of such person, estate, or trust;

(ii) is fully amortizing;

(iii) is with respect to a sale for which the seller determines in good faith and documents that the buyer has a reasonable ability to repay the loan;

(iv) has a fixed rate or an adjustable rate that is adjustable after 5 or more years, subject to reasonable annual and lifetime limitations on interest rate increases; and

(v) meets any other criteria the Board may prescribe;

To Read the Full Bill visit: http://www.govtrack.us/congress/billtext.xpd?bill=h111-4173

So is it an improvement?

Yes, since the previously proposed language had only exempted 1 seller carry-back transaction every 3 years. This makes the exemption for 3 in 1 year slightly more palatable.

You’ll also notice it requires the real estate note to be fully amortizing (no balloons), fixed rate for first 5 years, and the buyer showing an “ability to repay.” It does not require the seller to have lived in the property as his own residence.

If a seller financed transaction falls outside the set parameters then it has to meet the mortgage loan origination licensing requirements. That means getting a license or using a licensed mortgage originator to handle for a fee.

This also appears to be good news for loosening restrictions placed by the HUD Safe Act. As the law is implemented it should revise the minimum standards set for states under the Nationwide Mortgage Licensing System Registry. Certain states, such as Texas, are already incorporating seller-financing exemptions into their laws.

It’s hard to declare a victory for any law that chips away at our private property rights. However, the changes are welcomed. Or as one investor said, “Weekly beatings are better than daily beatings…”

Fighting to Preserve Owner Financing with the National Association to Protect Private Property Rights

What is Your Livelihood Worth?

It’s not a ridiculous question. As you read this, governmental agencies are actively working to eliminate all but the most basic form of owner financing without being a licensed mortgage originator.

Now industry leaders have joined efforts in the creation of an association to protect property owners, home buyers, and professionals in the seller-financed industry. Read more

Land Contract Buyer Sells Without Owner’s Consent – Real Deal #157

Our readers are the best source of real deals!

Here is one seller’s request for answers when dealing with a sneaky delinquent buyer that sold without consent. Read more

What is a Land Contract?

A Land Contract is a type of owner financing that allows the buyer to make payments to the seller for a home or land purchase. The buyer gets to use the property but the seller hangs onto official title until paid in full.

The contract comes under several names including Real Estate Contract, Contract for Deed, Installment Sale, and Land Contract. It is an alternative way to document the seller financing arrangement from the more common Note and Mortgage or Note and Deed of Trust.

One big consideration with a Land Contract is that the buyer will not receive the Warranty Deed to the property until the purchase price is paid in full. That means the seller stays in control as official title holder while the buyer makes payments. Think of the contract like a layaway program for the Deed.

So what’s the big difference? Well with a Deed of Trust or Mortgage the seller provides a Deed to the buyer at closing, transferring title to the buyer. Then the buyer simultaneously gives back a Purchase Money Mortgage (or Deed of Trust in some states) to the seller for the portion financed. When the amount financed is paid in full the Lien is simply satisfied.

When the seller holds fee simple title using a Real Estate Contract the buyer is holding equitable title. Since the buyer does not yet have the Deed it is almost impossible for the buyer to obtain any type of secondary financing unless the Contract is paid off.

The buyer also risks the seller encumbering or clouding title before the Contract is paid and the Deed released. To provide greater protection, the Fulfillment Warranty Deed can be held in trust by a third party escrow servicing agent

If the buyer quits paying and the seller needs to take back the property, a Real Estate Contract has the advantage of being faster and less expensive than a drawn out foreclosure process on a Mortgage or Deed of Trust.

The accepted use of a Real Estate Contract varies by state. They are common in many Western states like Washington, Oregon, Idaho, and New Mexico along with some Mid-Western states such as Michigan and Wisconsin. However a few states, like Texas, have passed regulations to prohibit use of Contracts for Deed.

A Real Estate Contract can be unrecorded or recorded at the county level depending on local practices. A seller can also sell contract payments for cash now. Just know that some investors may require conversion to a note and mortgage or a note and deed of trust.

A knowledgeable title company or real estate attorney can assist in selecting the best method of documenting the seller-financed transaction.

For more information on buying or selling with contracts read Personal Profit Series: Notes – The Complete Money Making System to Buying, Referring, Creating and Holding Real Estate Notes!

Looking For Notes In All The Wrong Places

You know that song right – the country singer looking for love in all the wrong places?

Well in the cash flow business we are often singing the blues about looking for deals in all the wrong places.

It is a simple fact that to make money in the note business we must first find deals. But time and money are at a premium, so what methods really work? Here’s how to avoid heartache and start finding deals…in all the right places. Read more

Note Buyer Success Story

Canyon Capital has been added to the Directory of Owner Financed Note Buyers. Discover a new investor listing and read how the owner went from start-up note broker to note buyer in just a few short years.

Note Investor (NI) recently interviewed Greg Gehlen (GG) to learn more about his note buying programs. Canyon Capital specializes in mobile homes on land and pays fees to cash flow brokers for the purchase of notes, trust deeds, and contracts.

NI: What is the current focus of your company?

GG: We buy seller-financed first-position lien notes in the Western U.S. Our primary focus is buying partials to still keep deals together that may not otherwise work.

NI: How did you get your start in the note business?

GG: In 2004 I wanted to buy or start a business and after I looked at a number of existing businesses I decided the best option for me would be to start a business. I attended Noteworthy here in Las Vegas and found a wealth of great information (people and materials) at the conference to get started in the paper business.

NI: What unique benefits does your company provide?

GG: We are able to make decisions quickly on files and we also buy notes that many people are not interested in – mobile homes on land.

NI: What type of notes or transactions will your company consider funding?

GG: We buy notes in the Western U.S. which includes WA, OR, CA, AZ, NV, NM, UT, CO, MT, ID, and WY. The type of note we prefer is mobile homes on land (no park paper). We will look at notes up to $150,000 but prefer partials under $50,000. We like to look at credit if possible but down payment, a solid pay history and property value are more important to us.

NI: What type of deals would just waste your time?

GG: New notes with small down payments and poor credit are not files we will fund.

NI: What do you consider the best methods for finding cash flow notes? Read more

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