Many of you may not be aware of the various ways notes can be used. The average person's understanding about notes is that people create them because they are desperate to sell a property. Nothing could be further from the truth.
Real estate investors are now creating notes to finance properties they wish to buy--then selling the notes in advance--then buying the property with the proceeds--in effect, with little to no money down; of their own.
Selling a property by being willing to create a note actually shows savvy on the part of the seller. Even some real estate agents view a seller's willingness to sell by owner financing as a desperate...but the real estate agent who knows better is very hard to find. Most of them are missing not only the boat, but the whole ocean!
Not to demean real estate agents, but most of them have a linear kind of thinking about how to sell property and it not only limits their own income, but hinders them from being the best helper they could and ought to be to property sellers.
Real estate investors and savvy property sellers bypass working with real estate agents for mainly the above mentioned reasons......not to mention the savings realized by not using real estate agents and having to pay their fee.
Okay, so here's a scenario we recently worked on to give you an example:
Mr. A wishes to buy Happy Trails Apartment Complex from Mr. B. The Happy Trails Apartment Complex is a 300 unit complex and is desirable when you run the income and expense calculation numbers on it.
The price is $25M and the appraised value is around $29M. Mr. A envisions that if he were able to create a note for $29M and sell it to note investors at a discount, he might still be left with enough to make an offer to the seller. Confused?
Okay, Mr. A approaches us with a proposed $29M note he wants to create in advance to buy Happy Trails Apartment Complex from Mr. B. We investigate the case and find that the property can service the debt.
Mr. A has good enough credit and sufficient equity in other properties to pledge as collateral to satisfy our investors. All that's needed from this point is for Mr. B to accept Mr. A's offer and for the appraisal to come in at $29M or better.
Mr. A approaches Mr. B and offers him $25M for his property. Mr. A proposes that he give Mr. B $21M upfront and asks Mr. B to carry back a $4M note. This allows Mr. A to not only give Mr. B $21M but it also allows Mr. A to keep $4M in reserve.
Mr. A now has two mortgages. One for $29M and one for $4M. All Mr. A has to figure out now is how best to structure the payment terms on the $4M note.
Although Mr. A will pay $31M dollars for the Happy Trails Apartment Complex in the end, how long do you think it will take for the property to be worth another $4M? Not many. And if Mr. A did some small thing like freshly painted all the units and raised the rent by only $5, he would generate an additional $15,000 per month instantly!
I could go on but hopefully I have sufficiently explained how real estate investors are creating notes and taking advantage of our Table Funding/Simultaneous Closing Program to achieve their goals.
If you would like to know whether Simultaneous Closing could work for you, contact us and let's discuss what your options are.
Frederick Webb is a Certified Cash Flow Consultant and is President & Co-Founder of Webb Funding Group, a small debt brokerage agency he runs with his wife, Kashita Webb.
Visit their site: http://www.mortgagenotecash.com
Recently I closed on the sale of two homes. They... Read More
There was a time when every conversation was focussed on... Read More
If you are investing in real estate you will face... Read More
Satisfying and lucrative real estate investment depends upon your correct... Read More
The CostAlthough the property prices in Bulgaria are quite low... Read More
Are you using the equity from your home to purchase... Read More
Be careful when buying rental property. We stayed at a... Read More
Learn how to sell your property faster and at the... Read More
In the superheated San Francisco Bay Area property market, foreclosed... Read More
The only way to buy a home in Spain is... Read More
Purchasing a home is a major emotional and financial decision.... Read More
Want to sell your home right away, for the highest... Read More
Flipping through late-night infomercials recently, I saw two real estate... Read More
Equity lender, hard money lender, private investor or what ever... Read More
These real questions on new home starts and interest rates... Read More
Real Estate is a multi-faceted investment arena - there are... Read More
If your home has just come off the market and... Read More
Earlier this month, Realtor Magazine announced that they would be... Read More
Consider the statistic in the title for a moment.8/10 millionaires... Read More
Interior colors are vitally important to selling your home quickly,... Read More
Happy New Year, Make it a better world. "Pay it... Read More
Is there a perpetual shadow hovering over your house? Do... Read More
Every year hundreds of thousands of foreign visitors travel to... Read More
A Powerful Suggested Technique for YOUR Home & Property Search... Read More
If you've read my first article, BUDGETING YOUR LOG HOME:... Read More
To avoid "buying a pig in a poke," buyers have... Read More
Real estate Internet marketing is a booming business, along with... Read More
Real estate web design requires you to do things a... Read More
The thought of selling a house strikes fear into most... Read More
If you want to become a real estate investor, find... Read More
The Murcia region in Spain benefits from some of the... Read More
There are three investment vehicles which can make you rich.... Read More
Real estate investing is not in any list of high... Read More
If you're a foreign national thinking about investing in the... Read More
Just like most things real estate investing can be broken... Read More
Buying and selling property is not as easy as you... Read More
What if you could "place an order" for the construction... Read More
Real estate investing has become popularized today because of real... Read More
A lakeside vacation or second home can be a quiet... Read More
Lots of folks think it can't be done.How in the... Read More
Last week, we started a multi-part series about how to... Read More
One of our investor students told us of an interesting... Read More
You decide to sell your home and believe you can... Read More
Thinking of trading up on an investment resort property? If... Read More
Zero down? Why would a seller want to walk away... Read More
Why offer seller financing when you sell? A higher price,... Read More
Real estate web design requires you to do things a... Read More
Renting to tenants is no longer "where the money is"... Read More
As a native Midwesterner, the first thing I noticed when... Read More
If you are thinking of relocating to Maui, this article... Read More
The Echo Boomers or Generation Y currently make up about... Read More
In addition to finding the right property, one of the... Read More
Selling income property isn't like selling a house. You can... Read More
A new business venture to help home sellers, home staging,... Read More
The Region has four distinct seasons but in general possesses... Read More
Many people buy a house then have to move within... Read More
It's a dream for many to buy and take ownership... Read More
What can go wrong? About a gazillion things, but this... Read More
Today's real estate consumer has a lot to consider during... Read More
Solving problems while maximizing valuesThis story has a few good... Read More
One of the things that distresses us about our industry... Read More
How did you get into real estate investing? Did you... Read More
The CostAlthough the property prices in Bulgaria are quite low... Read More
In addition to zoning, some properties have covenants recorded at... Read More
Choosing a first home can be a daunting task, but... Read More
We have become very concerned by the number of readers... Read More
Real Estate |