Owner Financing By The Numbers 2019

The number of notes created through owner financing in 2019 reached $23.9 Billion.

2019 Owner Financing Numbers At A Glance

  • There were 86,155 seller financed 1st position notes in 2019 compared to 91,605 in 2018, a 5.95% decrease.
  • The dollar volume of $23.9 Billion was a 7.41% decrease from the $24.9 Billion in 2018.
  • Almost 70% of the notes were created in just ten states.
  • Texas, Florida, California, Arizona, and North Carolina remained the top 5 states for  seller financing based on number of transactions, followed by Georgia, Washington, Oregon and New York.
  • Tennessee moved into the top ten states bumping Pennsylvania to 11th position by a slim margin.
  • The average Loan-to-Value (LTV) was:
    • 80% LTV on new Residential notes
    • 74% LTV for Commercial, and
    • 75% LTV for Land notes.
  • $113.8 Billion in owner financed notes were created in the past 5 years (2015 through 2019).

What About Seller Financing in 2020 and post COVID19?

The economy and real estate were strong in 2019.  Home mortgages through traditional lenders were plentiful with low rates. These factors were behind the reduction of new seller carry-backs in 2019.  But what about 2020? Things took an unprecedented turn when approximately 97% of the US went under some sort of stay at home orders from the Coronavirus outbreak.

Scott Arpan of Advanced Seller Data Services provides these insights:

“I believe this pandemic will greatly impact our market. It will not be possible to project trends for 2020 based on last year. The number of records we collected the third week of March dropped to 40% of counts from the third week in February. We are currently collecting about 30% of normal.

The drop in numbers is due to counties temporarily stopping data collection and slowing home sales. When the March and April sales numbers are available, we can project seller carry notes will see a similar decline for now. The remaining gap are records we have not been able to access yet.

We saw a similar drop in note creation between 2008 and 2009 followed by a doubling of notes created between 2010 and 2014. Unfortunately, record numbers of people are being furloughed from their employment. Unless the economy can quickly return to full employment, many will suffer damaged credit even when they are responsible borrowers. If they cannot qualify for a bank loan, or if the housing market softens significantly, history indicates we will see a flood of new notes.”

Owner Financing Stats From 2010 to 2019

Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Count 70,159 89,439 103,313 110,979 116,178 105,871 97,089 89,779 91,605 86,155
Change +27.5% +15.5% +7.4% +4.7% -8.9% -8.3% -7.5% +2% -5.95%

 

Ten Year Chart Owner Financing

Seller Carry Back Notes by Property Type

The number of notes created by property type (from records where property type is known).

2015 % 2016 % 2017 % 2018 % 2019 %
Residential 56,881 54% 47,651 49% 42,916 48% 49,169 54% 46,891 54.5%
Commercial 14,841 14% 14,467 15% 13,930 16% 13,484 15% 10,458 12%
Land 12,215 12% 11,784 12% 13,417 15% 12,176 13% 12,956 15%
Unknown 21,934 21% 23,187 24% 19,516 22% 16,777 18% 15,850 18.5%
105,871 97,089 89,779 91,605 86,155

Average Seller Carry Loan Amounts 2019

2019 Top 10 States For Owner Financing

The Top 10 states for the creation of seller financed notes made up 68.91% of the overall volume.

State 2018 Count Percentage
Texas 29,898 23.1%
Florida 8,977 10.4%
California 8,752 10.2%
Arizona 4,064 4.7%
North Carolina 4,005 4.6%
Georgia 3,799 4.4%
Washington 3,530 4.1%
Oregon 2,412 2.8%
New York 2,305 2.7%
Tennessee 2,054 2.4%
Top 10 59,796 69.4%
All 50 States 86,155

 

Owner Finanicing Top Producing State Map 2019Wondering how the remaining 40 states compared? Download the full report for a state by state listing.

Single Note Creators Vs. Multi Note Creators

There were 3,594 owner financiers (4.6%) that created more than 1 note during the 12 month period.  This group is often considered a professional user of seller financing in comparison to the “Mom and Pop” seller that just creates a single note.  There are also differences in the exemptions and requirements under the Dodd Frank Act based on the number of seller carry-back notes.

2014 2015 2016 2017 2018 2019
Note Count Where Seller Created 1 Note*

(% of Notes Created by count)

102,227

88%

90,078

85%

78,616

81%

76,675

85%

75,116

82%

74,586

87%

Note Count From Sellers Creating More Than 1 Note* 13,951 15,793 18,473 13,104 16,489 11,569
Totals 116,178 105,871 97,089 89,779 91,605 86,155

Thanks to Advanced Seller Data Services, a mailing list provider for providing these 2019 stats. They are based on 2096 counties reporting, balances of $30,000 or higher, on 1st position or wrap/AITD notes.

What are your thoughts on the recent statistics? We’d love to hear your feedback in the comment section below this article.

 

About Tracy Z

Tracy combines her knowledge of cash flow notes with the power of marketing online to help grow your business! She can be reached at Tracy@NoteInvestor.com 1-888-999-7905 or at Exposure One Marketing.

Comments

  1. Hi Tracy,
    Thank you for this insightful information. I have been paying attention to your work as well as Fred.
    I like the way in which you approach the business.
    Several years ago, a friend and I bought some 2nd position non performing notes. A year later, we felt lucky to get our investment back.
    I am fascinated though and I am considering your training.

    • Hello Vince, Thanks for reading our blog. I hear you on the NPN 2nds. We like the performing 1st position liens. While the NPN 2nds can offer more yield opportunity they come with a whole lot more risk, drama, headaches and potential legal fees.

  2. Thanks so much for this info. Great stuff!

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