Earn & Learn - Posted by David Butler
Posted by David Butler on November 01, 2005 at 16:51:56:
At first glance, it looks like you may have some very good… but apparent conflicting advice here. Resolution is clear though. Sounds like your mentor merely pointed out that motivated property sellers are not yet note holders - and you would have a lot of work to do on the front end of the deal in that respect.
And as you correctly suspected, finding and referring EXISTING notes is a much safer, and generally more profitable path for beginners - for several significant reasons. Not sure why it is, but given their lack of knowledge on the factors involved - far too many brand new folks tend to focus on “creating notes” - a very worthwhile, but very dicey, and potentially dangerous enterprise for the unknowing… as has been discussed at some length here in prior discussions related to “creating notes”, “simultaneous closing”, “table funding”, “ostensible agents”, “law of agency”, “usury”, “camoflauge loans” and similar closely related topical keywords.
So… without question, you made the right call here!
But - as Mike pointed out very well, such lead lists offer much potential - both for the opportunity to introduce them to the benefits of seller financing, as well as for possible future business as a result of any of those sellers who do wind up carrying paper - and then develop a need to sell it for cash at some point down the road.
In the meantime, as you become more familiar with the note business, and have some time to acquaint yourselves with the things you’ll need to be familiar with to also make simultaneous closes worthwhile, and safe for you (much of which you will find in the search engine here using the keywords mentioned above) - those lists can become even more valuable!
BTW… notes originating 100% financed properties have little to no interest for almost any note buyer, in most circumstances - and sellers carrying back small 2nds behind large 3rd party “firsts” - especially with little or no down payment going into the deal, are “dead in the water” right out of the gate.
Seasoning and developing payment history may cure those issues over time - again… another reason for keeping primary focus on EXISTING notes that already have these two features accrued to them - and keeping updated records on that “property seller” list as well.
By the way - am curious as to how you have qualified the list as one specifically made up of “motivated” property sellers? If that truly is the case, that’s a great list for both future note deals - and especially in the manner Mike suggested for buying and selling real estate for taking back profits in paper.
Hope this helps, and best wishes for your success!
David P. Butler