A mistake many investors and brokers make is to focus solely on notes secured by single family houses (SFHs). Unfortunately, that is a last-century approach. The lowest interest rates in recorded history have meant that our Springer Spaniel could qualify to buy a house.
So most homeowners have had no reason to offer seller financing. The Dodd-Frank Act of 2010 also negatively impacted the creation of notes, most likely because its complexity and consequent potential liabilities discourages real estate agents from even suggesting to sellers that they consider a note. Therefore, the inventory of seller-held SFH notes is far below what it used to be.
According to Advanced Seller Data Services (notesellerlist.com), the number of newly-created seller-held SFH notes dropped 10% nationally from 2014-2015 (the first time since 2009 that there was a decrease) and dropped another 16% from 2015-2016.
Note investors and brokers who ignore the lucrative market in other types of notes are leaving money on the table.
What types of notes?
For one, multifamily properties such as duplexes and apartment buildings. For another, commercial properties such as office buildings, strip malls and warehouses. A third is land, including farms and lots. Recreational property is another, as is the sale of businesses. Conventional financing is often difficult to obtain for these transactions, so they are frequently if not usually sold with owner financing. You should be marketing for these notes as well as SFH notes.
Here’s a partial list of other types of notes and future payments you can buy or broker. Granted, some are oddball, but there are investors for them. How many are YOU looking for?
- mobile home notes (with and without land; FYI, there are few buyers for m.h. notes w/o land)
- business notes (with and without real estate)
- class action awards
- accounts receivable, including medical and dental receivables
- purchase orders
- asset-based loans
- defaulted and sub-to-non-performing loans
- lottery winnings
- casino winnings
- sweepstakes winnings
- automobile notes
- motor home and rv notes
- marine notes
- aircraft notes
- equipment notes
- retail installment contracts
- home improvement notes
- time share notes
- royalties (on books, songs, performances, etc.)
- licensing agreements
- mechanic’s liens
- sports contracts
- lawyer’s fee notes
- real estate agent’s commission notes
- rights to TV shows
- pre-settlement lawsuits
- condo & HOA assessments
- notes on collectibles
- tax deeds, tax liens/certificates
- real estate lease options
- residential and commercial property leases
- gas, oil and mineral leases
- credit card portfolios
- worker’s compensation settlements
- health club memberships
- country club memberships
- cemetery lots
- funeral pre-need contracts
- reimbursement agreements to developers from utility companies
- cell tower leases
- billboard leases
- wind farm leases
- Conservation Reserve Program payments
- Commodity Credit Corp. payments
- future tax refunds
- life insurance payments
- divorce liens
- trust interests
- charitable remainder trusts
USE YOUR IMAGINATION!
About The Author: W. J. Mencarow is the editor of THE PAPER SOURCE JOURNAL, a publication for note investors and brokers. www.PaperSourceOnline.com
Editor’s Note From Tracy Z – I’ve personally subscribed to the Paper Source Journal for years and encourage you to do the same! In addition to receiving 12 issues of the monthly publication, Bill has generously offered all new subscribers access to last year’s back issues from 2016 and 2017 issues through April. Just Click Here and use the coupon code: noteinvestor
You will also receive access to The Paper Source Registry of Note Investors with any new subscription (or renewal) and as a limited time bonus for the next 10 days he will include Ken Gain’s e-book “Cash Now Seller Financing” ($19.97 value).