Posted by Jeff on June 28, 2011 at 10:09:18:
I have a couple of performing notes (good payers,
good neighborhood) that I am willing to sell to
free up some cash. House #1: buyer purchased
for 59,900, buyer put 15,000 down & monthly
payment 580 (t&i appx 120).
House #2: buyer purchased for 69,900, buyer put
down 10% w/ a monthly payment of 678.
I have pics & contracts for anyone interested.
Properties located in middle GA.
Today’s Note Market…Selling a note - Posted by Art V
Posted by Art V on February 03, 2011 at 19:22:43:
Hello All,
I have a few questions for the note group.
I am an experienced investor and I control about 15 single family properties right now. I am looking to begin creating notes to sell on these properties that I already own. The properties are cash flowing and stable and have been for several years.
I have tenants on a rent to own lease who have each put about 4% down to get into the house. I am looking for a way to free up working capital and I thought maybe selling a 1st position note or selling the whole thing as a land contract might be the answer.
I was looking at a 5 year term with 8% interest 1st position note and no more than 65% LTV. Is this feasible and what kind of discount am I looking at. The note can be made to my company or I can make it a land contract with the tenant.
My question is…
Is this possible or is the discount too great to be worth fooling with?
Is there anything I am missing?
Where do you find note buyers and is the market hot or cold for performing notes. Let me know your thoughts!
Thanks
Re: Today’s Note Market…Selling a note - Posted by Marc Faulkner
Posted by Marc Faulkner on February 20, 2011 at 22:43:22:
Assuming your properties are in decent areas and not in a war zone, you can sell these to your current tenants and carry back financing with the intention of later selling off the existing note(s). I would structure them as 20 year notes with 5 to 7 year balloons and rates that are higher than average market by a few points. Most seller financed deals are written at about 9%. Assume that the note buyers is going to use your sales price or a BPO as the actual value, whichever is less. Real Equity, credit and potential yield are the three most important factors in determining your notes value.
You will need to convert your current rent to own contracts to an actual sales using a sales contract, promissory note and mortgage or trust deed depending on what state you are in. If you have good payment records (copy of checks are the best) then you would certainly be allowed to use rent credit to add your buyers down payment and lower your LTV on the resulting notes. Use a lawyer or title company to close your transaction and get a lenders title policy. I suggest using a third party servicing company to do your collections and accounting for your notes. This also will provide you with an independent third party to verify your buyers pay history. In some areas your title company or closing agent can also act as the servicer. Some investors even pass these costs on to the buyers.
A solid pay history can make the difference in being able to sell or not sell a note where the payers credit is less than perfect. If you start working on this early in the process (like when you originally did the rent to own transactions) you will be much further ahead when it comes time to sell the note. Most note buyers are going to require at least 3 months seasoning and you will get more for your note with more seasoning. Make sure your buyers credit is not less than 580 in most cases as that is the bottom end of what most note buyers accept. Since you have not officially converted these yet you can also have your buyers ask family members yo co sign the notes which will increase the security and value of the note when it comes time to sell.
Selling what you own - Posted by bluegill
Posted by bluegill on February 04, 2011 at 14:29:45:
Sounds to me like it’d be simpler to just find a buyer for what you already own…15 properties that are all subject to being bought if/when buyers exercise their options.
Your creating new note(s) isn’t going to accomplish anything except muddy the water and although I’ve seen lots of people try to “create notes to sell” I can’t recall ever seeing such a deal really work.
And what you’d like for terms is probably wildly optimistic as no serious money person is going to want to get into that deal without a whole lot higher yield for him/her.
Re: Selling what you own - Posted by HC
Posted by HC on February 08, 2011 at 13:43:02:
There is some possibility of creating a note and with terms satisfactory for yourself and the note buyer. I purchase notes and my partner is an underwriter. The amount of discount in my opinion will depend on a couple of factors: how much down payment, how many payments made, credit score, length of term (how many months) and interest rate. How this would benifit yourself is you will get cash now in exchange for payments later. And the note buyer will get the property back if the payor doesn’t pay? Please message me back I’m interested if you are seriously looking to create a note or two for sale?