Find Cash Flow Notes – 3 List Building Strategies

Contacting note holders offering to pay cash for note payments is a winning cash flow business marketing strategy.

But how do you create a list of people interested in selling cash flow notes? Read more

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

Foreclosures Create Owner Financing Demand

Over 2.8 million properties were slapped with foreclosure filings in 2009 – a staggering 120 percent increase in the past two years.

Discover why this bad mortgage crisis increases demand for seller financing and opportunity in the cash flow note business. Read more

Get Reliable Pricing When Selling a Mortgage Note!

Wondering whether to trust the pricing for the sell of a mortgage or land contract?

Here’s how to know if it’s a firm offer or just a soft quote when going to sell a private mortgage note. 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!