holding or buying paper - Posted by Rich

Posted by John Behle on November 15, 1998 at 16:04:13:

There are very few institutions or even private investors out there that are in the habit of financing notes. You won’t find them in the same place that you find the buyers of notes. Even though most buyers are clueless as to what they ought to do with their notes, they still prefer to buy intead of loan.

There are some institutions, but usually they are different than the normal buyers. Some small banks, thrifts and credit unions invest in paper and many (if they are already an investor) will also loan against the note. Some may want to qualify you, but if they are already an investor, then they know that the note and the payor of the note are what’s important and your financial situation or ratios are not that big of a deal.

For example, a thrift and loan in our area that was my biggest competitor at one point would also loan me money against notes. They didn’t even as much as check my credit. In fact, they made “non-recourse” loans.

So, check first with local institutions that also buy notes. Then check with local investors that buy notes. (The national ones rarely do).

The best investors usually end up being ones that I create. Read the article about “Financing Paper” in this forum and it should help answer your questions.

holding or buying paper - Posted by Rich

Posted by Rich on November 15, 1998 at 06:29:13:

I enjoy your discussions here and have learned much. I have been investing in real estate for about a year now and have enjoyed some nice success. I am just now beginning to deal with buying and selling notes. I find it easy for me to find people who will buy my notes but I can’t seem to find people or lenders who will finance those notes I take or the ones that I might buy. Just as when I buy and Refinance cash purchases of real estate, doesn’t everyone worry about income/debt ratios when lending money on the paper? How do I get around those concerns? What is a good interest rate from a private lender for financing these notes?

Thanks for your response