Posted by RobertR CO on July 17, 2001 at 18:48:52:
…detail, clarity and creativity.
Cordially, RobertR
My First Deal - I Need YOUR help!!! - Posted by John Jay
Posted by John Jay on July 15, 2001 at 13:42:51:
I’m just about ready to put a SFR under contract.
Here’s the deal:
FSBO SFR: $100,000
COMPS: $145,000
House is in excellent shape, 6 years old, owner moving out of Florida to New York.
Here’s what i intend to do:
I’ll buy for $100,000 (seller is firm on this price.)
Then I (investor) will “Seller will Finance” for $135,000
With 10% Down, 5% Second and a 85% First. (85-10-5)
I have a buyer lined up with B credit that will buy from me for $135,000
Here’s the question:
Where do I find a reputable Investor who will table fund
my Note at closing.
Note will be for: $114,800
Will sell note at closing for (85%) $97,500.
I need some help on this, as this will be our first deal.
Thanks
John Jay
In sunny (darn hot) Orlando
Re: My First Deal - I Need YOUR help!!! - Posted by Douglas
Posted by Douglas on July 27, 2001 at 09:48:40:
Hello John:
We work with a group that does these type of transactions on a daily basis nationwide. Flipping and SIMO closings only wrong when fraudulent…Douglas
You need the right note buyer - Posted by NCPaul
Posted by NCPaul on July 15, 2001 at 21:40:29:
This is a deal that sounds closeable. (Making the assumption everything we don’t know checks out ok.) True, a buyer who will do a simultaneous close may be harder to find than it used to be, what you can accomplish still depends on who you know. I guarantee that there are note-buyers who will do a simultaneous close on a property bought and sold as you described. Don’t count on using your own appraiser, they have their own list, but if the value is legitimate you may have a deal.
A good place to find a buyer for your deal would be notenetwork.com on their free note listing service.
Remember, note buyers can be anybody. If one buyer can’t close the deal citing reasons akin to a traditional lender, find another buyer. It seems that some note-buyers have lender envy, though they lack the licensure to originate loans they want nothing but conforming paper. Move on and find a hungry buyer!
Good Luck
Quick flip may arouse concern… - Posted by Michael Morrongiello
Posted by Michael Morrongiello on July 15, 2001 at 14:06:51:
John:
Your deal as I understand it is a classic “quick flip” type transaction which involves seller financing to facilitate the “Sale” side of the property that you wish to acquire. This type of “creative” program has been touted as being doable by many seminarians, workshop instructors, etc. - However what they fail to tell you is that this deal in concept sounds workable, but few if any note funders (we will and do) will warm up to the idea of being asked to invest in the purchase or buy a newly created note on a home that is “really” being purchased for $100K and then immediatly being resold for $135K with in essence the funds generated from the sale of the seller financed note. They love to sell you on the “sizzle” and leave you to figure out how to do these deals after you’ve purchased their books, tapes, materials, etc.
The “seasoning of title ownership” issue will come into play here and there are some ways to still make this deal viable even with that issue.
Clearly, obtaining DETAILED information on the prospective buyer, their employment, stabiility, credit profile, credit scores, income, etc. will be of paramount importance in having any note funder (including ourseleves) warm up to this type of newly crated seller financed note file.
Feel free to contact me if you need assistance in making this one happen.
To your success,
Michael Morrongiello
The Winter of our discontitle… - Posted by RobertR CO
Posted by RobertR CO on July 17, 2001 at 13:43:12:
You write:
“The ‘seasoning of title ownership’ issue will come into play here and there are some ways to still make this deal viable even with that issue.”
Do you have some time to elaborate on your statement?
As posted below, I am doing my “feasibilty study” about creating a seller carry note (as an exit strategy) after purchasing a mobile home on land. I can hold the note if that would significantly decrease the note buyer’s discount. How long must I hold? Six months? Twelve?.
Cordially,
RobertR
Tips, Tricks, Traps, - quick flips - Posted by Michael Morrongiello
Posted by Michael Morrongiello on July 17, 2001 at 18:26:38:
When purchasing property or contemplating the purchase of property that is earmarked to be a “quick flip” most lenders these days are not willing to make a loan to a new prospective “retail” buyer UNLESS you as the investor, promoter, etc. have had LEGAL title and ownership to the property for at least 6 months or longer.
This “underwriting practice” is simply in many cases prudent lending and it also drives the, not so honest, bent on disception, “fraud” investor / promoters and other charlatans who put together these deals under another rock to hide somewhere else. NOTE: This is not meant to slight anyone who profits from doing this business in any way. I personally purchase, renovate, and resell properties as well. However the requirements of doing these deals have changed as the result of many of these charlatans operations and deceptive practices, so we ALL get tagged.
Using seller financed notes as a “tool” to circumvent this restrictive lender underwriting practice is a great way to still get these deals done.
What the investor, or promtor needs to be aware of is the following:
- Down payment monies need to be documented clearly
- If there is much more than a 25% run up in the properties acquisiton price Vs the sales price or value then some documentation as to why is appreciated (receipts for work done, labor, materials, etc.) go a long way to creating a comfort level for the note funder who is being asked to invest their dollars based upon the higher “retail” value.
- In some cases, it might make sense to NOT actually take title to the property at all. Simply get an “option” or some other agreement to lock in your sellers cash sales price and then have THEM sell DIRECTLY to the “retail” buyer. The property sellers then take back their seller financed note, and then disposed of this note. Now no title seasoning of ownerships issues have taken place.
- Clearly if you have the ability to “season” or collect payments on the note that was created as the result of the sale for a period of time which could be anywhere from 1 month to 6 months +/- it allows increased funder comfort. Establishing a payment history that can be documented also allows for lesser credit payors to be doable.
There are some other issues, as well to explore that simply cannot be fully outlined here in the space allowed. Feel free to contact me as we continue to purchase seller financed paper that is created as the result of these deals.
To your success,
Michael Morrongiello