3 Notes Mortgage Buyers Just Aren’t That Into

Private mortgages aren’t going to be perfect. Note buyers know this and that makes them pretty good at finding creative ways to safely buy mortgage payments.

But there are some notes and land contracts that just don’t make good investments. Save yourself time and marketing dollars by knowing the three notes that investors just aren’t that into. Read more

UPDATE on HR 1728: How Congress Wants to Change Seller Financing

There is growing and legitimate concern over how Bill HR 1728 would severely restrict seller financing. Be sure to read this informative update. Read more

Should You Work with Private Investors?

With the stock market plummeting by the minute, you may have a few friends, business associates, or relatives asking more about notes – specifically investing in them. 

There is no question investing in notes can be a very lucrative venture. If you have your own money you can receive a great yield. If you don’t have your own capital, you can “broker” the deal to a Funder for a nice referral fee or commission. Private investors however are in a category by themselves. 

First off, if you were to sell a note to a private investor (say a family member or friend), you can’t help but feel a bit more obligated that everything goes well. While it may not be a legal obligation, it can certainly stir feelings of personal responsibility.  If the payer misses some payments you will no doubt be on the phone on behalf of the note holder trying to work out a deal. Is this really what you signed up for when you thought of tapping into all that “private money?” 

If you want to continue on the path of selling to private investors, here are three quick questions to ask yourself. 

1. Can you get the same amount (or close) by selling the note to a traditional Funder? If so, sell to the professional corporate Funder versus a private investor. 

2. Is the private investor “sophisticated?” In other words, do they already invest in notes and fully realize the risk? 

3. Is anyone in the transaction a family member? Avoid family and friends. Really, what is the upside? 

With that said, there are plenty of sophisticated private investors out there that purchase notes on a regular basis. Make sure they understand the risks and all documentation goes directly in their name. 

Avoid Three Costly Mistakes!

Would you rather have $97,000 to sell your $100,000 note or only $80,000?  The difference usually comes down to the big three. Here’s the three biggest mistakes note sellers make and how to avoid flushing money down the drain. Read more

Moneymaking Opportunities with Notes!

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.

Visit the Bookstore for Your Complete Moneymaking System for Buying, Brokering, Creating, and Hold Real Estate Notes!

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