Showing posts with label cash flows. Show all posts
Showing posts with label cash flows. Show all posts
Monday, August 9, 2010
WE ARE MOVING OUR BLOG
We are moving our blog posts to our domain. For more articles please visit our Creative Real Estate Funding Site. We will no longer post to this site. We also buy mortgage notes.
Friday, June 18, 2010
Seller financing aids the seller and buyer
Seller financing is one field of the real estate industry that aids more than the house purchaser and the individual house seller. Home mortgages held by sellers are likely customers for investors that purchase seller financed home mortgages. For many people outside the real estate industry, this little observed market is large business for many. In order to understand how this market works, we have to recognize both sides of the business of owner will carry financing.
In a down market such as we are experiencing now, credit freezes up and conventional lenders inside the mortgage industry approve very few new mortgages unless the candidate has higher than average credit. For those people with less-than great credit, acquiring a loan thorough traditional channels is non-existent. Fortunately for these people, there is a large quantity of houses on the market with sellers willing to unload.
Some of these sellers are ready to offer what is called owner will carry financing which means they will operate as the lending institution. Rather than having to pay a credit business each month the customer will pay his monthly mortgage to the home seller. When financial times are good and lending institutions are offering creditowner carry financing is at a low. More people can obtain credit thorough conventional means.
The seller will carry the note until the note is paid or he sells the cash note to someone else, in this case a mortgage investor. Mortgage note investors are people that specialise in buying and selling money transactions. Notes come in many different varieties. Just about any transaction where a agreement is signed and a repayment plan is the mode of repayment, can be bought and sold.
Seller financed notes are the most widely recognized with the mortgage industry as they are real estate based. The market is built easily enough as sellers many times desire to free up the cash they have tied up in the cash note they are holding on the property. The seller may need the capital for any amount of reasons. He may want to make further investments with superior returns. Crisis conditions might have come up that force him to liquidate his holding. Children might need to go to university. The motives are endless.
Whatever the case may be, there are loads of investors eager to acquire these seller held mortgages. These investors purchase these money transactions largely for investment motives growing their portfolios. Though, income streams are the major purpose. By getting just a few notes the investor can generate a significant monthly income stream that will continue until the contracts are fulfilled or sold to another person.
In come instances, these mortgage notes are defaulted on at which time the investor forecloses on the house, keeps all the funds he has collected on past repayments then sells the property to another buyer. Seller financing aids many individuals involved in a real estate transaction. Individuals that can not acquire a mortgage through established means, single sellers as well as those investors within the notes industry.
Find out realistic recommendations about the topic of internet marketing – please make sure to read the site. The times have come when concise information is truly only one click away, use this possibility.
Visit our other blog for more info
email for more information
In a down market such as we are experiencing now, credit freezes up and conventional lenders inside the mortgage industry approve very few new mortgages unless the candidate has higher than average credit. For those people with less-than great credit, acquiring a loan thorough traditional channels is non-existent. Fortunately for these people, there is a large quantity of houses on the market with sellers willing to unload.
Some of these sellers are ready to offer what is called owner will carry financing which means they will operate as the lending institution. Rather than having to pay a credit business each month the customer will pay his monthly mortgage to the home seller. When financial times are good and lending institutions are offering creditowner carry financing is at a low. More people can obtain credit thorough conventional means.
The seller will carry the note until the note is paid or he sells the cash note to someone else, in this case a mortgage investor. Mortgage note investors are people that specialise in buying and selling money transactions. Notes come in many different varieties. Just about any transaction where a agreement is signed and a repayment plan is the mode of repayment, can be bought and sold.
Seller financed notes are the most widely recognized with the mortgage industry as they are real estate based. The market is built easily enough as sellers many times desire to free up the cash they have tied up in the cash note they are holding on the property. The seller may need the capital for any amount of reasons. He may want to make further investments with superior returns. Crisis conditions might have come up that force him to liquidate his holding. Children might need to go to university. The motives are endless.
Whatever the case may be, there are loads of investors eager to acquire these seller held mortgages. These investors purchase these money transactions largely for investment motives growing their portfolios. Though, income streams are the major purpose. By getting just a few notes the investor can generate a significant monthly income stream that will continue until the contracts are fulfilled or sold to another person.
In come instances, these mortgage notes are defaulted on at which time the investor forecloses on the house, keeps all the funds he has collected on past repayments then sells the property to another buyer. Seller financing aids many individuals involved in a real estate transaction. Individuals that can not acquire a mortgage through established means, single sellers as well as those investors within the notes industry.
Find out realistic recommendations about the topic of internet marketing – please make sure to read the site. The times have come when concise information is truly only one click away, use this possibility.
Visit our other blog for more info
email for more information
Saturday, June 12, 2010
Q. I own my single-family home with no mortgage outstanding, and I'm gainfully employed in a secure government position. I plan to retire in about five years. I have lived in my home for the past 20 years, but now find it to be more burden than haven. I am planning on selling it and renting a nearby townhouse condominium. I listed my home with we thought was a competitive price. But it has been on the market for nearly six months, and I've received only two low-ball offers. I reduced the price twice.
I've been told the banks are causing a problem. There are a lot of self-employed folks with cash who cannot get mortgages. I am thinking about offering my house for sale with 70 percent seller financing. My hope is to get it sold for full price, earn 5.5 percent interest on my money and, if the buyer defaults, get my house back down the road. I can do a 5-, 10- or even 15-year balloon mortgage based on a 30-year payoff schedule. I have been told that I am not obligated to accept any buyer; if I don't like their credit, I say no.
I believe offering seller financing will give my listing an edge and might get some action. I am thinking of insisting that the buyers prepay the first year of homeowners' association dues and an estimated water bill because I understand that these items can become liens against the property. I am also planning to ask the buyers to pay into an escrow account each month to cover the semiannual real property taxes and the annual hazard insurance premium when they become due. That way, I can ensure that these critical bills are paid because I will be paying them from the escrow account.
What's your opinion?
A. I strongly endorse this seller-financing approach, as long as you get a substantial down payment. And, since you indicated you will be getting 30 percent down, that should be sufficient. This plan will also provide you a regular monthly source of funds for many years, depending on how long you are willing to wait to get all your money, plus interest. Although the principal portion may or may not be taxable (because you are selling your principal residence, you are entitled to exclude the first $250,000 of capital gain from your taxable income), the interest portion of each payment will be taxable to you.
I recommend preparing an amortization table to show you and your buyer how much of each payment is principal and how much is interest. Amortization tables are available at sites such as Bankrate.com.
Seller financing is an excellent means of obtaining the best price for your home, but it is not without risk. One concern is that a 5.5 percent interest rate might look fine now, but rates can fluctuate wildly. Ideally, you wouldn't want to hold that 5.5 percent note for more than a few years. If you think interests rates will fall, you should consider imposing a prepayment penalty in your promissory note. Prepayment penalties are governed by state laws.
If you think interest rates will rise, consider offering to take back an adjustable rate mortgage. An ARM is a mortgage that has a fixed interest rate for a certain period of time, after which the rate changes at set intervals. In your case, assume that the 5.5 percent interest rate would be fixed for five years. At the end of the first five-year period, the interest rate would adjust annually. This adjustment feature protects you should interest rates rise five years down the road.
The adjusted interest rate is a function of an index (assume the prime rate as reported by The Washington Post) plus a margin of one to three percentage points, for example. On the adjustment date specified in your loan contract, you would add the margin to the index to get the adjusted interest rate. You might want to consult a financial planner or stockbroker to assist you in determining which index and margin to use.
Make sure the promissory note that the buyer signs is fully negotiable, that is, transferable to another party. There is a fairly brisk market in these types of seller-financing notes. Once the note is seasoned, with the buyer having made regular payments for six to 12 months, you will be able to sell it (albeit at a discount) if you ever want the pile of cash. You will also want to make sure the loan is secured by having your buyer sign a deed of trust. Have that deed of trust recorded in the land records office as a lien against the home. That way, if the buyer defaults, you can foreclose and get the house back.
I'd recommend insisting on an automatic debiting feature so monthly payments are taken from the buyer's checking account and deposited into your separate "My Old House Note Account." That way, you can go online every month and monitor the payments.
You should do a credit check with all three credit-reporting bureaus and obtain your buyer's FICO score from Myfico.com. Prior to the closing you should insist that the attorney conducting the closing provide you with a closing-protection letter from his title insurance underwriter. The letter protects you against any problems with the settlement attorney.
At settlement, make sure you obtain a lender's policy of title insurance at your buyer's expense. Finally, have the buyer pay all credit report and closing costs, including the expense of having the promissory note and deed of trust prepared and the deed of trust recorded.
This is not legal advice and should not be acted upon without obtaining your own legal counsel.
Visit our Blog
We BUY Mortgage Notes
List Your Note
I believe offering seller financing will give my listing an edge and might get some action. I am thinking of insisting that the buyers prepay the first year of homeowners' association dues and an estimated water bill because I understand that these items can become liens against the property. I am also planning to ask the buyers to pay into an escrow account each month to cover the semiannual real property taxes and the annual hazard insurance premium when they become due. That way, I can ensure that these critical bills are paid because I will be paying them from the escrow account.
What's your opinion?
A. I strongly endorse this seller-financing approach, as long as you get a substantial down payment. And, since you indicated you will be getting 30 percent down, that should be sufficient. This plan will also provide you a regular monthly source of funds for many years, depending on how long you are willing to wait to get all your money, plus interest. Although the principal portion may or may not be taxable (because you are selling your principal residence, you are entitled to exclude the first $250,000 of capital gain from your taxable income), the interest portion of each payment will be taxable to you.
I recommend preparing an amortization table to show you and your buyer how much of each payment is principal and how much is interest. Amortization tables are available at sites such as Bankrate.com.
Seller financing is an excellent means of obtaining the best price for your home, but it is not without risk. One concern is that a 5.5 percent interest rate might look fine now, but rates can fluctuate wildly. Ideally, you wouldn't want to hold that 5.5 percent note for more than a few years. If you think interests rates will fall, you should consider imposing a prepayment penalty in your promissory note. Prepayment penalties are governed by state laws.
If you think interest rates will rise, consider offering to take back an adjustable rate mortgage. An ARM is a mortgage that has a fixed interest rate for a certain period of time, after which the rate changes at set intervals. In your case, assume that the 5.5 percent interest rate would be fixed for five years. At the end of the first five-year period, the interest rate would adjust annually. This adjustment feature protects you should interest rates rise five years down the road.
The adjusted interest rate is a function of an index (assume the prime rate as reported by The Washington Post) plus a margin of one to three percentage points, for example. On the adjustment date specified in your loan contract, you would add the margin to the index to get the adjusted interest rate. You might want to consult a financial planner or stockbroker to assist you in determining which index and margin to use.
Make sure the promissory note that the buyer signs is fully negotiable, that is, transferable to another party. There is a fairly brisk market in these types of seller-financing notes. Once the note is seasoned, with the buyer having made regular payments for six to 12 months, you will be able to sell it (albeit at a discount) if you ever want the pile of cash. You will also want to make sure the loan is secured by having your buyer sign a deed of trust. Have that deed of trust recorded in the land records office as a lien against the home. That way, if the buyer defaults, you can foreclose and get the house back.
I'd recommend insisting on an automatic debiting feature so monthly payments are taken from the buyer's checking account and deposited into your separate "My Old House Note Account." That way, you can go online every month and monitor the payments.
You should do a credit check with all three credit-reporting bureaus and obtain your buyer's FICO score from Myfico.com. Prior to the closing you should insist that the attorney conducting the closing provide you with a closing-protection letter from his title insurance underwriter. The letter protects you against any problems with the settlement attorney.
At settlement, make sure you obtain a lender's policy of title insurance at your buyer's expense. Finally, have the buyer pay all credit report and closing costs, including the expense of having the promissory note and deed of trust prepared and the deed of trust recorded.
This is not legal advice and should not be acted upon without obtaining your own legal counsel.
Visit our Blog
We BUY Mortgage Notes
List Your Note
Monday, April 19, 2010
Government offers Home Affordable Modification Program
New alternatives to foreclosure unveiled
Government offers Home Affordable Modification Program
Homeowners who can't afford their mortgage payments may want to take a look at the federal government's new alternative to foreclosure: the Home Affordable Foreclosure Alternative program, or HAFA, which intended to encourage lenders to facilitate short sales and deeds-in-lieu, or DIL, as alternatives to foreclosure.
The program, which is a part of the Home Affordable Modification Program, or HAMP, may help some homeowners escape a bad situation, but the rules are complicated and they won't be able to keep their homes.
U.S. Treasury Assistant Secretary Herbert Allison explained the concept in congressional testimony.
"HAMP does not, nor was it ever intended to, address every delinquent loan," he said. "In these instances, the borrower may benefit from an alternative that helps the borrower transition to more affordable housing and avoid the substantial costs of foreclosure."
Here are some details from the government's 43-page directive for loan servicers:
A short sale allows the homeowner to sell the home and use the proceeds to satisfy the first mortgage even if the sale price is less than the loan balance.
A DIL allows the homeowner to voluntarily give up the home to satisfy the first mortgage even if the home is worth less than the loan balance.
The homeowner can get pre-approval for a short sale at a specific minimum price or net proceeds before the home is put on the market.
The homeowner can receive $1,500 for relocation expenses at closing. This sum may be reported to the Internal Revenue Service as income.
The home must be the homeowners principal residence.
The mortgage must be delinquent, or default must be reasonably foreseeable.
The unpaid loan balance must be less than $729,750 for a single house or condominium. Higher limits are allowed for two- to four-unit residential properties.
The homeowners monthly mortgage payment must be more than 31 percent of his or her gross income.
The homeowner must transfer clear title. The lender will allow up to three percent of each second loan or lien, up to $3,000 in total, to help the homeowner satisfy these obligations.
The government's directive excludes loans that are owned or guaranteed by Fannie Mae or Freddie Mac. However, the two government-run mortgage corporations are expected to release their own guidelines.
Homeowners can use the Loan Look Up Tool on the Making Home Affordable Web site to find out whether they have a Fannie Mae or Freddie Mac loan.
The lender cannot require a cash contribution or promissory note, cannot pursue a deficiency judgment and must release the homeowner from all future liability for the debt.
The loan servicer can use the financial information and hardship letter that the homeowner submitted for a loan modification, or request updated information to evaluate the homeowners eligibility.
The loan servicer must assess the current value of the home. If the short sale or DIL isn't completed, the servicer can add the cost of this assessment (e.g., an appraisal) to the loan balance.
The homeowner must sign a Short Sale Agreement or DIL Agreement on or before Dec. 31, 2012.
The home must be listed for sale with a licensed local-area real estate professional. (This requirement doesn't apply to DIL.)
The homeowner must cooperate with the real estate professionals efforts to sell the home and maintain the interior and exterior of the home.
The servicer and homeowner must meet a number of time frames.
The lender may require the homeowner to make full or partial payments on the mortgage, up to 31 percent of the homeowners income, subject to the lender's written policies.
The homeowner cannot have a close business or personal relationship with the real estate agent or buyer and cannot have an expectation of buying back or renting the home after the short sale or DIL closes.
The lender can initiate or continue, but not complete a foreclosure sale while the homeowner is involved in the program.
Homeowners should discuss the income tax consequences of debt forgiveness with a qualified tax professional.
The servicer will report the short sale or DIL to the credit bureaus. That will hurt the homeowners credit score, although not as severely as a foreclosure.
The buyer in a short sale can't resell the home within 90 days of the purchase.
The program launched April 5 and is scheduled to sunset on Dec. 31, 2012. Servicers may elect to implement the program sooner than the official effective date.
Homeowners are encouraged to contact their loan servicers to find out whether they are eligible for the program or call the HOPE hot line at (888) 995-4673 to speak to a government-certified mortgage counselor. More than 100 servicers have signed up for the program.
These servicers are required to participate and write their own policies subject to investor guidelines.
Going up
Mortgage rates jumped for the second straight week.
The average 30-year fixed-rate mortgage rose 12 basis points, to 5.35 percent. A basis point is one-hundredth of a percentage point. Rates have risen 24 basis points in two weeks and are now at their highest point since Nov. 4, 2009.
Meanwhile, this week's average 15-year fixed-rate — a popular option for refinancing — leapt 16 basis points, to 4.69 percent.
The average jumbo 30-year fixed rose 6 basis points, to 5.98 percent.
Adjustable-rate mortgages split this week. The one-year adjustable-rate mortgage remained unchanged, at 4.74 percent. Meanwhile, the popular 5/1 ARM rose 4 basis points, to 4.55 percent.
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Government offers Home Affordable Modification Program
Homeowners who can't afford their mortgage payments may want to take a look at the federal government's new alternative to foreclosure: the Home Affordable Foreclosure Alternative program, or HAFA, which intended to encourage lenders to facilitate short sales and deeds-in-lieu, or DIL, as alternatives to foreclosure.
The program, which is a part of the Home Affordable Modification Program, or HAMP, may help some homeowners escape a bad situation, but the rules are complicated and they won't be able to keep their homes.
U.S. Treasury Assistant Secretary Herbert Allison explained the concept in congressional testimony.
"HAMP does not, nor was it ever intended to, address every delinquent loan," he said. "In these instances, the borrower may benefit from an alternative that helps the borrower transition to more affordable housing and avoid the substantial costs of foreclosure."
Here are some details from the government's 43-page directive for loan servicers:
A short sale allows the homeowner to sell the home and use the proceeds to satisfy the first mortgage even if the sale price is less than the loan balance.
A DIL allows the homeowner to voluntarily give up the home to satisfy the first mortgage even if the home is worth less than the loan balance.
The homeowner can get pre-approval for a short sale at a specific minimum price or net proceeds before the home is put on the market.
The homeowner can receive $1,500 for relocation expenses at closing. This sum may be reported to the Internal Revenue Service as income.
The home must be the homeowners principal residence.
The mortgage must be delinquent, or default must be reasonably foreseeable.
The unpaid loan balance must be less than $729,750 for a single house or condominium. Higher limits are allowed for two- to four-unit residential properties.
The homeowners monthly mortgage payment must be more than 31 percent of his or her gross income.
The homeowner must transfer clear title. The lender will allow up to three percent of each second loan or lien, up to $3,000 in total, to help the homeowner satisfy these obligations.
The government's directive excludes loans that are owned or guaranteed by Fannie Mae or Freddie Mac. However, the two government-run mortgage corporations are expected to release their own guidelines.
Homeowners can use the Loan Look Up Tool on the Making Home Affordable Web site to find out whether they have a Fannie Mae or Freddie Mac loan.
The lender cannot require a cash contribution or promissory note, cannot pursue a deficiency judgment and must release the homeowner from all future liability for the debt.
The loan servicer can use the financial information and hardship letter that the homeowner submitted for a loan modification, or request updated information to evaluate the homeowners eligibility.
The loan servicer must assess the current value of the home. If the short sale or DIL isn't completed, the servicer can add the cost of this assessment (e.g., an appraisal) to the loan balance.
The homeowner must sign a Short Sale Agreement or DIL Agreement on or before Dec. 31, 2012.
The home must be listed for sale with a licensed local-area real estate professional. (This requirement doesn't apply to DIL.)
The homeowner must cooperate with the real estate professionals efforts to sell the home and maintain the interior and exterior of the home.
The servicer and homeowner must meet a number of time frames.
The lender may require the homeowner to make full or partial payments on the mortgage, up to 31 percent of the homeowners income, subject to the lender's written policies.
The homeowner cannot have a close business or personal relationship with the real estate agent or buyer and cannot have an expectation of buying back or renting the home after the short sale or DIL closes.
The lender can initiate or continue, but not complete a foreclosure sale while the homeowner is involved in the program.
Homeowners should discuss the income tax consequences of debt forgiveness with a qualified tax professional.
The servicer will report the short sale or DIL to the credit bureaus. That will hurt the homeowners credit score, although not as severely as a foreclosure.
The buyer in a short sale can't resell the home within 90 days of the purchase.
The program launched April 5 and is scheduled to sunset on Dec. 31, 2012. Servicers may elect to implement the program sooner than the official effective date.
Homeowners are encouraged to contact their loan servicers to find out whether they are eligible for the program or call the HOPE hot line at (888) 995-4673 to speak to a government-certified mortgage counselor. More than 100 servicers have signed up for the program.
These servicers are required to participate and write their own policies subject to investor guidelines.
Going up
Mortgage rates jumped for the second straight week.
The average 30-year fixed-rate mortgage rose 12 basis points, to 5.35 percent. A basis point is one-hundredth of a percentage point. Rates have risen 24 basis points in two weeks and are now at their highest point since Nov. 4, 2009.
Meanwhile, this week's average 15-year fixed-rate — a popular option for refinancing — leapt 16 basis points, to 4.69 percent.
The average jumbo 30-year fixed rose 6 basis points, to 5.98 percent.
Adjustable-rate mortgages split this week. The one-year adjustable-rate mortgage remained unchanged, at 4.74 percent. Meanwhile, the popular 5/1 ARM rose 4 basis points, to 4.55 percent.
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Wednesday, March 31, 2010
Help Sell Your Home Faster
1. Get a home inspection before you sell. It is always better to be proactive and know what if anything is wrong with your home before a buyer does. They will ask you to drastically reduce your asking price.
2. Clean clutter. Nothing turns off a buyer like junk and clutter.
3. Ask 10% lower price than the property is worth. This will bring more buyers and the price will get bid up.
4. Get light into the home. Clean windows and get rid of dark drapes. Nothing sell better than natural light, it makes your rooms look bigger.
5. You do not need to bake cookies. Place a few drops of vanilla on a warm oven door will produce the same results.
6. Replace a worn mailbox. This will enhance the curb appeal.
Please feel free to post your tips.
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2. Clean clutter. Nothing turns off a buyer like junk and clutter.
3. Ask 10% lower price than the property is worth. This will bring more buyers and the price will get bid up.
4. Get light into the home. Clean windows and get rid of dark drapes. Nothing sell better than natural light, it makes your rooms look bigger.
5. You do not need to bake cookies. Place a few drops of vanilla on a warm oven door will produce the same results.
6. Replace a worn mailbox. This will enhance the curb appeal.
Please feel free to post your tips.
Visit Our Blog
Saturday, January 2, 2010
Tips on Selling Your Property
When it comes to selling real estate, one of the most difficult and
frustrating situations for sellers is when market conditions make it
nearly impossible to sell at the desired price point. A high initial
listing price might be because the seller simply has an unrealistic
idea of how their house stacks up against the competition in the area,
or because the owner needs to sell for a set minimum price in order to
pay off their loan against the property.
With traditional property sales methods, the only way to prevent the
property from sitting on the market indefinitely is to keep dropping
the price. Unfortunately, this technique doesn't always work -
especially if the seller is unwilling to "discount" their house by
much.
In areas flooded with homes for sale, reducing the asking price
slightly will not bring the desired result. In fact, it's common that
the property will continue to sit on the market without offers,
alongside the multitude of other unsold properties with similarly
reduced prices.
Anyone experienced in sales understands that making your product stand
out from the crowd is a critical technique for success. But if there's
too much competition offering the same attributes, the only logical
way to attract the attention of serious buyers is to drop the price so
that your property is a much better value than the competition.
In cases where the seller is too inflexible with their asking price,
this is not a practical solution. Without an alternative strategy, the
seller is forced to keep the house on the market for an extended
period of time with an unrealistic asking price, hoping for the right
buyer to come along. And as you know, that "Mr./Mrs. Right" might
NEVER materialize!
The Seller Finance Solution
Property sellers who want to both obtain their desired price and close
on the deal quickly should consider seller financing. Seller financing
is a powerful tool to remedy real estate situations that otherwise
look grim.
Many home sellers (and their real estate agents) do not see seller
financing as a viable option. In actuality, seller financing can bring
new attention to the listing and invite a different group of potential
buyers - thereby opening up a unique, untapped market.
A large percentage of people throughout the country cannot get
approved for bank funding to buy real estate because of their credit
situation. Many of these people are still in the market to buy a
house, however. The "credit-challenged" are often frustrated with the
limitations of apartment living or being renters; as a result, many
are willing to pay a higher price just for a chance to get seller
financing and improve their quality of life.
A savvy property seller who recognizes this opportunity can salvage an
unfavorable situation and turn it into a bonafide seller's market. By
using this type of creative financing, the seller could actually end
up getting more than the original asking price - without resorting to
the questionable strategy of patiently waiting for the "right buyer".
Seller finance can enable homeowners to receive a favorable selling
price despite bad market conditions. In addition, the real estate
agent (if any) gets to close a deal and move on to other sales, while
a home buyer with poor credit is able to become a home owner. It's one
of those rare situations where everyone at the negotiating table gets
what they want.
Paper Tigers
Many home sellers never consider seller financing because they don't
understand the benefits. There are also common misconceptions that
it's much too complicated to attempt to orchestrate a seller financed
deal, or that there are no buyers willing to sign a private note.
Once a property seller takes the time to learn about the basic
process, the advantages of offering financing instead of a lower price
to sell their property become very clear. Plus, a little education
about seller finance will make it apparent that drafting a secured
private note is actually a very straightforward process.
The bottom line is seller financing can enable a home owner to "have
their cake and eat it too" - i.e., sell at the desired price, close
the deal quickly, and even receive additional income from interest
payments as well.
frustrating situations for sellers is when market conditions make it
nearly impossible to sell at the desired price point. A high initial
listing price might be because the seller simply has an unrealistic
idea of how their house stacks up against the competition in the area,
or because the owner needs to sell for a set minimum price in order to
pay off their loan against the property.
With traditional property sales methods, the only way to prevent the
property from sitting on the market indefinitely is to keep dropping
the price. Unfortunately, this technique doesn't always work -
especially if the seller is unwilling to "discount" their house by
much.
In areas flooded with homes for sale, reducing the asking price
slightly will not bring the desired result. In fact, it's common that
the property will continue to sit on the market without offers,
alongside the multitude of other unsold properties with similarly
reduced prices.
Anyone experienced in sales understands that making your product stand
out from the crowd is a critical technique for success. But if there's
too much competition offering the same attributes, the only logical
way to attract the attention of serious buyers is to drop the price so
that your property is a much better value than the competition.
In cases where the seller is too inflexible with their asking price,
this is not a practical solution. Without an alternative strategy, the
seller is forced to keep the house on the market for an extended
period of time with an unrealistic asking price, hoping for the right
buyer to come along. And as you know, that "Mr./Mrs. Right" might
NEVER materialize!
The Seller Finance Solution
Property sellers who want to both obtain their desired price and close
on the deal quickly should consider seller financing. Seller financing
is a powerful tool to remedy real estate situations that otherwise
look grim.
Many home sellers (and their real estate agents) do not see seller
financing as a viable option. In actuality, seller financing can bring
new attention to the listing and invite a different group of potential
buyers - thereby opening up a unique, untapped market.
A large percentage of people throughout the country cannot get
approved for bank funding to buy real estate because of their credit
situation. Many of these people are still in the market to buy a
house, however. The "credit-challenged" are often frustrated with the
limitations of apartment living or being renters; as a result, many
are willing to pay a higher price just for a chance to get seller
financing and improve their quality of life.
A savvy property seller who recognizes this opportunity can salvage an
unfavorable situation and turn it into a bonafide seller's market. By
using this type of creative financing, the seller could actually end
up getting more than the original asking price - without resorting to
the questionable strategy of patiently waiting for the "right buyer".
Seller finance can enable homeowners to receive a favorable selling
price despite bad market conditions. In addition, the real estate
agent (if any) gets to close a deal and move on to other sales, while
a home buyer with poor credit is able to become a home owner. It's one
of those rare situations where everyone at the negotiating table gets
what they want.
Paper Tigers
Many home sellers never consider seller financing because they don't
understand the benefits. There are also common misconceptions that
it's much too complicated to attempt to orchestrate a seller financed
deal, or that there are no buyers willing to sign a private note.
Once a property seller takes the time to learn about the basic
process, the advantages of offering financing instead of a lower price
to sell their property become very clear. Plus, a little education
about seller finance will make it apparent that drafting a secured
private note is actually a very straightforward process.
The bottom line is seller financing can enable a home owner to "have
their cake and eat it too" - i.e., sell at the desired price, close
the deal quickly, and even receive additional income from interest
payments as well.
Monday, November 16, 2009
Need Cash Now? Sell Your Mortgage Notes!
Get cash now and forget those monthly payments FOREVER! We work with buyers who are ready to pay top dollar for your notes. If you have a trust deed, a mortgage note or any private loan, it's time to find out exactly how much CASH you could be entitled to.
* It's Quick: Learn how to cash out in minutes
* It's Easy: You could have cash in just days
* It's Secure: Get real quotes directly from certified buyers
There has never been an easier or faster way to cash out of your investment. Whether you need money to pay bills... to buy a home... to fund an education... or even if you just need some spending cash... We'll show you the money!
List your Note at Smiling Dog Enterprises
Email us for information. Get Cash Now
* It's Quick: Learn how to cash out in minutes
* It's Easy: You could have cash in just days
* It's Secure: Get real quotes directly from certified buyers
There has never been an easier or faster way to cash out of your investment. Whether you need money to pay bills... to buy a home... to fund an education... or even if you just need some spending cash... We'll show you the money!
List your Note at Smiling Dog Enterprises
Email us for information. Get Cash Now
Monday, November 2, 2009
Selling A Home In A Tough Market
In previous issues, the best method for selling a home in a tough
market with seller financing was explained. The benefits to the seller
from involving a qualified cash flow finder with a seller financed
deal and having a note buyer "on board" before the note is created
were also covered. While using seller finance techniques to sell a
property are no more difficult than a traditional real estate closing,
following a logical and proven plan is the best method for ensuring a
successful real estate sale with seller financing.
The sellers' misconception
Many property sellers stay away from seller financing because they
mistakenly believe that creating a note is not a viable solution for
selling their home. After all, if they can't walk away with enough
cash to provide the down payment on another property, they'll be
powerless to replace the property they're selling.
As a consequence of this common misunderstanding, many sellers feel
compelled to stick with conventional real estate methods, limiting
their options and missing out on the benefits that seller financing
could offer them.
In actuality, many notes created through seller financing are quickly
sold and the seller ends up with the cash they need. Even better, if
the note is created with buyers' purchasing criteria in mind, the
seller could walk away from the closing table with cash in hand. This
means that the net result is almost exactly the same as with a
conventional real estate sale!
In the cases where the note holder does have a problem selling their
monthly payments, the difficulty in liquidating the note is typically
a result of one general problem: the note was not created with the
buyer in mind. Instead, it was created with only the payer in mind. To
ensure that a newly-created note will be attractive to potential
buyers, it is important to recognize that their purchasing criteria
are important as well.
Too good of a deal
For property sellers looking to sell their note immediately, it would
be a grave mistake to create the note by prioritizing only the payer's
demands. A buyer must have a compelling reason to agree to collect
payments in order to buy a note, such as a substantial down payment, a
respectable payer's credit score (to minimize risk), a competitive
interest rate, or a fairly short term.
An example of a "bad note" from a buyer's point of view would be a
seller financing situation where no down payment was collected, the
payer's credit score was not checked, and the interest rate is fixed
at 3%. Basically, this is TOO good of a deal! Even payers that qualify
for loans from traditional lending institutions would jump at this
offer with no out-of-pocket money required and a rate below prime.
Clearly, the note payer and note buyer are looking for very different
things. Payers would love a "no money down" purchase with financing at
a low interest rate, but most buyers wouldn't want anything to do with
this sort of note simply because it is a bad deal for them.
In a situation without a reasonable down payment there is nothing
holding the payer to their obligation. After all, a payer involved in
a "no money down" purchase could walk away and lose almost nothing
financially. Abandoning their obligation to pay may hurt their credit
score, but it was their substandard credit that forced them into a
seller-financing situation in the first place.
When there is no equity in the property (buyers will use the lower of
the property value or the sales price to calculate equity), all offers
to purchase the secured note will be discounted substantially in order
to compensate for the buyer's risk of default. A heavily discounted
buyout offer often means the seller will not be able to get the money
they need.
If the seller of a private note needs a large amount of cash
immediately, they must be able to sell the note as soon as it has been
created. And to quickly find a buyer, the note must meet the general
buying parameters of these people, which include a solid down payment,
a decent interest rate, and typical terms.
Creating notes that can be sold
Every buyer has their own criteria that determine what they will or
won't buy, but a down payment of at least 10% is a good minimum figure
when creating a note. This upfront payment immediately creates equity
in the property which acts as the buyer's safety net in a foreclosure.
A competitive interest rate is important because it will make it easy
for the buyer to purchase the note and yield the desired profit
without much of a discount to the note holder. Finally, keep in mind
that people typically avoid notes that do not follow a traditional
term (amortized over 120 months, 180 months, etc). A two-year,
interest-only balloon term is a perfect example of a note that most
buyers would avoid.
The points described above are only a rudimentary starting point for
note creation; there are certainly other things that buyers look for
when considering a note. It is always a good idea for the seller to
contact a qualified note finder in order to get the specific
information they need.
The finder will be able to utilize their experience in working with
buyers to give the seller general guidelines about what should meet
most buyers' parameters. Of course, there are no absolute guarantees
of a quick sale, but when the seller creates a note with the buyer.s
needs in mind, it should not be a problem to locate an interested
buyer who will give the seller the cash settlement they need.
email us
Visit A Dog Blog
market with seller financing was explained. The benefits to the seller
from involving a qualified cash flow finder with a seller financed
deal and having a note buyer "on board" before the note is created
were also covered. While using seller finance techniques to sell a
property are no more difficult than a traditional real estate closing,
following a logical and proven plan is the best method for ensuring a
successful real estate sale with seller financing.
The sellers' misconception
Many property sellers stay away from seller financing because they
mistakenly believe that creating a note is not a viable solution for
selling their home. After all, if they can't walk away with enough
cash to provide the down payment on another property, they'll be
powerless to replace the property they're selling.
As a consequence of this common misunderstanding, many sellers feel
compelled to stick with conventional real estate methods, limiting
their options and missing out on the benefits that seller financing
could offer them.
In actuality, many notes created through seller financing are quickly
sold and the seller ends up with the cash they need. Even better, if
the note is created with buyers' purchasing criteria in mind, the
seller could walk away from the closing table with cash in hand. This
means that the net result is almost exactly the same as with a
conventional real estate sale!
In the cases where the note holder does have a problem selling their
monthly payments, the difficulty in liquidating the note is typically
a result of one general problem: the note was not created with the
buyer in mind. Instead, it was created with only the payer in mind. To
ensure that a newly-created note will be attractive to potential
buyers, it is important to recognize that their purchasing criteria
are important as well.
Too good of a deal
For property sellers looking to sell their note immediately, it would
be a grave mistake to create the note by prioritizing only the payer's
demands. A buyer must have a compelling reason to agree to collect
payments in order to buy a note, such as a substantial down payment, a
respectable payer's credit score (to minimize risk), a competitive
interest rate, or a fairly short term.
An example of a "bad note" from a buyer's point of view would be a
seller financing situation where no down payment was collected, the
payer's credit score was not checked, and the interest rate is fixed
at 3%. Basically, this is TOO good of a deal! Even payers that qualify
for loans from traditional lending institutions would jump at this
offer with no out-of-pocket money required and a rate below prime.
Clearly, the note payer and note buyer are looking for very different
things. Payers would love a "no money down" purchase with financing at
a low interest rate, but most buyers wouldn't want anything to do with
this sort of note simply because it is a bad deal for them.
In a situation without a reasonable down payment there is nothing
holding the payer to their obligation. After all, a payer involved in
a "no money down" purchase could walk away and lose almost nothing
financially. Abandoning their obligation to pay may hurt their credit
score, but it was their substandard credit that forced them into a
seller-financing situation in the first place.
When there is no equity in the property (buyers will use the lower of
the property value or the sales price to calculate equity), all offers
to purchase the secured note will be discounted substantially in order
to compensate for the buyer's risk of default. A heavily discounted
buyout offer often means the seller will not be able to get the money
they need.
If the seller of a private note needs a large amount of cash
immediately, they must be able to sell the note as soon as it has been
created. And to quickly find a buyer, the note must meet the general
buying parameters of these people, which include a solid down payment,
a decent interest rate, and typical terms.
Creating notes that can be sold
Every buyer has their own criteria that determine what they will or
won't buy, but a down payment of at least 10% is a good minimum figure
when creating a note. This upfront payment immediately creates equity
in the property which acts as the buyer's safety net in a foreclosure.
A competitive interest rate is important because it will make it easy
for the buyer to purchase the note and yield the desired profit
without much of a discount to the note holder. Finally, keep in mind
that people typically avoid notes that do not follow a traditional
term (amortized over 120 months, 180 months, etc). A two-year,
interest-only balloon term is a perfect example of a note that most
buyers would avoid.
The points described above are only a rudimentary starting point for
note creation; there are certainly other things that buyers look for
when considering a note. It is always a good idea for the seller to
contact a qualified note finder in order to get the specific
information they need.
The finder will be able to utilize their experience in working with
buyers to give the seller general guidelines about what should meet
most buyers' parameters. Of course, there are no absolute guarantees
of a quick sale, but when the seller creates a note with the buyer.s
needs in mind, it should not be a problem to locate an interested
buyer who will give the seller the cash settlement they need.
email us
Visit A Dog Blog
Monday, June 1, 2009
Why Investing Near Universities is Your Best Bet!
I've always been bullish on real estate for long term investment, portfolios, retirement. But the real estate I love the most was where I first started buying, next to a big, growing, sprawling university.
I still believe these areas are what I call "Real Estate to Die For." Universities, colleges and schools of higher learning are all pillars in our communities. They are here in perpetuity, during our lifetimes, our children's and their children's lifetimes. They contribute greatly to the local economies, and hopefully, will grow in size as more Americans and foreign students want to be educated.
Look in areas within a short distance to the school of your choice. The closer the proximity, the less time it takes for your tenants to get to school. They can stay at school longer, too, without having to be pressured to leave campus and have a long commute home.
There are tons of opportunities to rent to students and many colleges have off-campus housing offices to help students find landlords and vice versa. Make sure you get parents co-signed on the lease, even if you need a local attorney to draw up paperwork for you. It might cost a little at the beginning, but will more than pay off if there's a problem with collecting rents down the road.
What's the difference between a student to living in the college-owned dormitory or your off-campus housing? Lots of differences. First of all, students prefer the privacy of living in their own room/space and not having to share a room with another student or two! They are adults for the first time in their lives and the last thing they want is the loss of privacy that comes with sharing a dorm room. Next, they are much more independent out of the dormitory, sharing a condo or town home with another student or more.
Properties do not have to be hi-end or include crazy upgrades. It's enough that they are clean, spacious, comfortable and near school.
We can help you finance your property if you have a mortgage note or trust deed to sell. email for more information.
Tuesday, May 19, 2009
Consolidate Your Debts
Are you facing difficulties in paying back the loans
because you have two or more pending debts? If your answer is yes, then
debt management is the solution for you. It is a process which
reorganizes your debts to more affordable repayments terms. It clubs
your multiple high interest unsecured loans, into a single loan with
lower interest rate.
Various financial aid consultants are
deployed by the lenders, who negotiate with your creditors on your
behalf. An expert from financial institute selected by you meets your
creditors and makes an arrangement after which, you just need to pay
certain amount to the institution and not directly to creditor. The
amount paid by you includes fee waivers and discounts on debts owed by
you. This service is also open for bad credit history holders. After
the loan consolidation, you just have to make a single monthly payment,
which covers for all the loans which get consolidated.
You can
ask for quotes from various lenders if you want to get this service.
The quotes are provided free of cost and they enable you to explore the
difference between costs of debt management options provided by
different loan providers. This management is offered to you keeping in
mind, your financial situation and credit status.
With the help
of a proper research about the financial institutes offering this
service, you can certainly spot competitive interest rates. With the
help of this management, you will no more have to face harassment from
different lenders, as you will only be dealing with a single loan
provider.
In order to strike the suitable deal, you can switch to
the Internet. With the help of on line mode, you can come across various
financial institutions and lenders providing you with this management.
You can make comparisons between different terms and conditions offered
by different lenders and then select a suitable deal.
Debt
management helps you to settle your scattered debts and multiple
financial obligations. It is an affordable way to deal with your debt
problems.
If you are holding a mortgage note, you can sell a mortgage note and get cash now.
If you have a mortgage note you can sell your mortgage note for cash now. We have buyers that want to purchase your mortgage note. We can close in 2-3 weeks. Click here to email us for more information.
Monday, May 18, 2009
Check Your Credit Score Before You Apply For A Mortgage
Bad credit or good credit, the process of obtaining a mortgage has changed. Even if you are simply trying to refinance your existing mortgage, you may be surprised at how different things are. Of course your credit score always played a significant role in determining what kind of loan you can apply for, but nobody could have predicted what you need in order to get a mortgage today.
in the past, banks were eager to lend money to people who were interested in buying a new home. They would barely look at your income and sell you loans that were more than you could afford - virtually regardless of your credit history. A credit score of around 680 points would have been considered good credit and allowed you to get preferred rates and the best plans.
Today, just a few months later, things have changed dramatically and it is nearly impossible to get a mortgage without excellent credit. The good news is that along with those changes, it has become increasingly easy to increase your credit score.
Before you try to get a new home loan, the very first step is to access your personal credit information to find out where you stand on the credit score scale. You can then use this information to remove the errors that are common to credit reports, quickly increase your score, and then get approved for the loan you need.
You can also think about owner financing with a mortgage note. Click here to contact us for more information.
Tuesday, May 12, 2009
More Selling your Property in a Difficult Market
The Spring 2009 Real Estate Season is peculiar. It is a buyer's market but with only a few buyers around. Those that are looking, and able to buy, are fearful of making a mistake. Lots of mistakes: buying too high, buying a house that doesn't comp out, buying too soon, missing the bottom.
It is impossible to time the market. Money managers can't do it and neither can we in the real estate business. This is because we only know where the bottom is when it has passed when you're no longer in it!
So with such overwhelming pressure on the price, what options does a seller have to keep the value of his property in tact?
Here, in NJ real estate, when there is a large supply and fewer buyers, it is unwise to keep dropping the price. That simply creates a price war that no-one can win. Instead, understand that buyers will be comparing all the options in their price point as analytically as they can find tools. The strategy to shore up value is to focus on the beauty contest and offer tools of comparison that enables your property to stand out. Clearly and cleanly.
The Beauty Contest
Your home must look its best. All the stuff we know - freshly painted, neat and tidy, clean and in perfect condition. PLUS,
- Open spaces in each room. Buyers need a place to stand to see each room and then see room for them to move into.
- How does it work? If they were to buy this house, where would they eat, play, work, sleep, rest and relax, etc.
- Depersonalized. More than personal photos, certificates and trophies, put away anything that is completely specific to you the homeowner, as opposed to a wide group of buyers.
- Photos. The last and most important part of the beauty contest is the pictures. You must have beautiful photos of the inside and outside of your home, taken from the right angle, with the right lighting so that the house looks great...online! 85% of all home searches start online, and the more photos you show, the better your home stands out against the competition.
Tools of Comparison
Buyers, with lots of choices, will compare and contrast options by price point, as carefully and analytically as they can. Make sure you offer them information to make the best comparison possible. The more information you can provide here, the more in control you are of the story being told to the buyer. information to have available, on hand, with the realtor's brochure, floor plan and comps is:-
- Illustrations of the home being located in a "Great Neighborhood "
- The Cost to Run the home
- Square Footage, amenities including # of closets, level lot, basement & extra spaces (include everything that could possibly be seen as a positive; you just don't know what's going to trigger the "must have it" impulse!)
- Ratio of Asking Price: Assessed Value
- Recent Sales in the Neighborhood and feel free to offer a paragraph to each listing illustrating how you stack against each sale.
Sunday, May 10, 2009
Selling your Property in a Difficult Market
If you listen to the media hype, you're probably thinking that you need to hold onto your home until the economy bounces back; that you'll never offload your house in this market. While it's true that sellers in some regions are finding it tough to sell right now, there are still buyers out there looking for a home.
The first step you need to take to ensure a successful sale of your home is to hire a reputable listing agent. While many people try the For Sale by Owner route first, most discover that selling a home is time consuming, complicated, and requires more specialized knowledge than they have.
Many homeowners who try to sell their home on their own become overwhelmed with trying to market their property to buyers. After all, it takes more than a yard sign and a couple of balloons to attract large numbers of viable buyers.
A good real estate agent will organize and host open houses for you, taking care of the scheduling, showing buyers around, and answering their questions. For these events, they will likely create professional brochures or fliers that feature the listing details of your home, as well as highlight the property's best features. This gives buyers something to bring home with them, and will make a positive impression.
In addition to traditional marketing methods like open houses, today's agents will also develop a solid advertising campaign for the internet. With over 80% of buyers starting their home search on the web, listing your home on the Multiple Listing Service and on other reputable websites is an important step in getting your home noticed. Thousands of agents and potential buyers will be able to access details and photos of your home from the comfort of their living room.
Having a web savvy agent is absolutely vital in this market, but you also want an agent who has been in the industry for a few years-particularly one who has experienced the ups and downs of the housing market. He or she will be able to provide insight and practical advice about how best to go about getting your home sold in a difficult market.
With your listing price set and marketing campaigns in place, a realtor will also help you negotiate with buyers to get the best price possible. Agents are trained and skilled in the art of negotiation, and will make the entire transaction much smoother for everyone.
Successful sales are possible even in slow markets like this one, but it's important to have an ally with know-how to guide you along the way.
Do not forget about seller financing with a mortgage note. We can help you with selling a mortgage note or creating one to take back financing.
Thursday, May 7, 2009
Things to consider when selling your home FSBO
If you're opting to sell your own home rather than using a realtor, it's important to take a systematic, proven approach to your sales campaign. The market is very different to what it once was, and you should focus on how to sell a house during recession. This article outlines 3 areas that are crucial to a quick house sale.
1) Your Pricing Strategy
It's not wise to aim for big profits in the current market. Unless you live in a particularly unaffected area, you're going to find that the only way to sell your own home is to ask at or just below market value. Don't be scared of this, as chances are buyers will run the price up. In fact, with a good marketing campaign your price can be risen quite high through buyers competing with each other.
2) Your Advertising Campaign
It's absolutely imperative that your advertising is targeted to wards the right market. Let me say now that the majority of serious buyers at the moment are property investors. Families are not exactly in a position to buy. Keeping this in mind, you need to write your sales copy and headlines to appeal to these investors. Write about how much profit they'll make in 5 years time when the market returns to normal.
3) Your Property Presentation
A very popular trend over the past few years has been "home staging". That is essentially where you move your old furniture out and hire some up-market household items to ive your place an expensive feel. Though this strategy can work well, I think many buyers are now weary of it. Instead, just de-clutter your home of excess "stuff", and go for an airy and open feel. Concentrate on your bathroom and kitchen especially.
You should also consider taking back the mortgage with a mortgage note!
Visit our site for more information or email mortgagenotes@smilingdogenterprises.com
Friday, March 27, 2009
Understanding the logic of note discounting
Understanding the logic of note discounting
When the owners of real estate notes liquidate their investments the resulting sales will almost always require some kind of discount. Here’s an easy explanation of the Investment to Value (ITV) method that many Note Buyers use to determine their pricing.
Most experienced Note Buyers have predetermined guidelines in mind that serve to narrow their focus to the notes that are likely to fit their buying preferences. Still, many buyers will purchase almost any note if the price is right – in other words, if the financial rewards are in line with the associated risk. To compensate for added exposure buyers adjust their pricing guidelines downward, which results in a higher yield.
Many buyers gauge their risk in a deal by considering their Investment to Value (ITV) percentage. ITV measures the amount of protective equity the Note Buyer has by comparing her purchase price to the property value. The amount of protective equity in the property is calculated by subtracting the ITV from 100. The lower the number or percentage the safer it is for the Note Buyer.
When a Note Buyer thinks that acquiring a note may be risky one potential solution is to make a lower offer that decreases the ITV. A lowered ITV results in more protective equity for the Note Buyer.
An ITV-based buying example
Consider a house valued at $100,000 that secures a $95,000 note. If the Payor in this situation had poor credit or a history of missing payments this would be considered a risky situation. Since there is only $5,000 in equity any Note Buyer would want a mitigating factor to offset the risk involved in
this purchase.
A logical way to improve this deal from the buyer’s perspective is to make a discounted offer. If a buyer offers only $60,000, the ITV would be 60 percent, giving him 40 percent of protective equity. That $40,000 of protective equity could help her to make a profit, even in a foreclosure situation. If the buyer incurs extra costs when foreclosing and reselling the house, the $40,000 of protective equity should more than cover the
extra expenses.
Note Buyers always have to look after their own interests. Consequently, notes with little equity and a poor payment history are likely to see deeper discounts in order to create protective equity for the buyer. This protective equity will help ensure that Note Buyers can recoup their funds if Payor default leads to foreclosure.
email us or Mortgage Note
When the owners of real estate notes liquidate their investments the resulting sales will almost always require some kind of discount. Here’s an easy explanation of the Investment to Value (ITV) method that many Note Buyers use to determine their pricing.
Most experienced Note Buyers have predetermined guidelines in mind that serve to narrow their focus to the notes that are likely to fit their buying preferences. Still, many buyers will purchase almost any note if the price is right – in other words, if the financial rewards are in line with the associated risk. To compensate for added exposure buyers adjust their pricing guidelines downward, which results in a higher yield.
Many buyers gauge their risk in a deal by considering their Investment to Value (ITV) percentage. ITV measures the amount of protective equity the Note Buyer has by comparing her purchase price to the property value. The amount of protective equity in the property is calculated by subtracting the ITV from 100. The lower the number or percentage the safer it is for the Note Buyer.
When a Note Buyer thinks that acquiring a note may be risky one potential solution is to make a lower offer that decreases the ITV. A lowered ITV results in more protective equity for the Note Buyer.
An ITV-based buying example
Consider a house valued at $100,000 that secures a $95,000 note. If the Payor in this situation had poor credit or a history of missing payments this would be considered a risky situation. Since there is only $5,000 in equity any Note Buyer would want a mitigating factor to offset the risk involved in
this purchase.
A logical way to improve this deal from the buyer’s perspective is to make a discounted offer. If a buyer offers only $60,000, the ITV would be 60 percent, giving him 40 percent of protective equity. That $40,000 of protective equity could help her to make a profit, even in a foreclosure situation. If the buyer incurs extra costs when foreclosing and reselling the house, the $40,000 of protective equity should more than cover the
extra expenses.
Note Buyers always have to look after their own interests. Consequently, notes with little equity and a poor payment history are likely to see deeper discounts in order to create protective equity for the buyer. This protective equity will help ensure that Note Buyers can recoup their funds if Payor default leads to foreclosure.
email us or Mortgage Note
Wednesday, December 31, 2008
Tips on Cutting Your Business Taxes
As the calendar turns to another year, it's time to get 2008 tax information in order. Taking advantage of all opportunities can reduce the burden. Here are some opportunities, courtesy of the Internal Revenue Service, that are not widely known. If they don.t apply to your 2008 returns, this is a good time to consider them for the new year. In hiring, consider taking advantage of the Work Opportunity Tax Credit.
This was designed to provide an incentive to hire from certain groups with particularly high unemployment rates, including urban youths, government assistance recipients, ex-convicts, veterans and vocational rehabilitation referrals. The credit has been extended a number of time. Now it's combined with the welfare to work tax credit and extended through August 31, 2001. The combined credit is available for employers hiring from one or more of nine targeted groups. Depending on the group and circumstances, the maximum credit per employee ranges from $1,200 for qualified summer youth employees to $5,000 for long term family assistance recipients. If you own real estate, you might benefit from cost segregation.
Real estate holdings represent a significant capital investment. Cost segregation carves out shorter lived assets, which qualify for five, seven and 15 year write off periods, normally embedded in a building's construction or acquisition cost, and thus depreciated over 38 years. Reclassifying assets and accelerating depreciation could bring tax savings and easier write offs when items become obsolete. Reclassifying assets is most effective for property valued at $1 million or more. For retailers that are considering buying equipment, enhanced Section 179 may help. The Economic Stimulus Act of 2008 has two incentives for business that purchase, tangible personal property, for use in the business. The first enhancement Section 179 is expensing.
For property placed in use during the 2008 tax year, business can deduct up to $250,000. the deduction begins to phase out if the business spends more that $800,000. Before the Act, the Section 179 expense limit was up to $238,000, with a phase out beginning at $510,000. What property qualifies? Generally, the property must be newly purchased tangible personal property, actively used in the business and for which a depreciation deduction would be allowed. It must be used more than 50 percent for business.
Bonus depreciation is back, offering another incentive to purchase equipment. It is the second incentive in the Economic Stimulus Act. This incentive was used after 9/11 and after the gulf cost hurricanes, to encourage businesses to invest. The new law provides qualifying taxpayers 50 percent first year bonus depreciation of the adjusted basis of qualifying property.
To claim bonus depreciation, the assets must be new, qualified property put into service after December 31, 2007. Qualified property must be: "Property with a depreciation recovery period of 20 years or less." "Depreciable computer software that is not amortizable over 15 years." "Water utility property." "Qualified leashold improvement property." If purchasing equipment isn't practical, there are tax advantages to leasing. If you lease your equipment, you are allowed a full write off of lease expenses each year, no matter the size of your business or the dollar value of the leases.
Technorati Tags: irs, taxes, tax credit, real estate, financial planningWednesday, December 3, 2008
How to make sure you get the highest price for your mortgage note.
How to make sure you get the highest price for your mortgage note.
- Buyer's credit.
The better the credit rating of the buyers, the more valuable your note.- If they are a husband and wife, find out the credit rating of both of them. many time the wife is earning more than the husband.
- If you don't have a credit report, you can order a free report from us.
- Sale price of real estate.
If this is MORE than the actual value of the real estate expect to take a bigger discount when you sell the note. An experienced note buyer wants to have some equity in the property in case the buyer defaults. - Third party buyer.
If you sell to a family member or friend you WILL have difficulty collecting your payments. - Actual, provable value of the real estate.
If you are taking back a first mortgage note there is no legal reason to have an appraisal. But if you intend to SELL the note, any experienced note buyer will want to know what the property is worth. It may be harder to access the property and have an appraisal done after you close on the sale. - Loan to Value ratio. LTV.
For a note to be marketable the total LTV, that is including the first and second mortgage (if any) should be no more than 75% of the actual value of the property. However, if the buyer's credit is good, this 75% could refer to the Investment to Value or ITV. In other words, the amount the note buyer is investing in the note. Thus if the property is worth $100,000 and the buyer has put down a 10% payment and has a $90,000 mortgage, you could get $75,000 (75% of the value) for your note. - Who are the buyers?
If the buyers are husband and wife they BOTH need to sign the note. If the buyer is a corporation, trust or LLC then make sure the principals also PERSONALLY sign the note. If they refuse to do so this could be an indication they will let the note default if the deal doesn't work out for them. Of of, this need not apply if the buyer is a substantial corporation. (I wouldn't ask Bill Gates to personally sign on a note from Microsoft. :-) But how about a note from WorldCom or Enron?) If the borrower is NOT a substantial corporation then the note could be either unsaleable or only saleable at a much larger discount to reflect the lack of personal liability. - Seasoning, aging.
There is no doubt that a seasoned note, where the buyers have made payments for a year or more, is easier to sell and will get a higher price than a new one. But of course you won't have this option if you want to do a simultaneous closing. - Institutional lender allows secondary financing.
There are many institutional lenders, banks etc. that will not allow secondary financing behind their note. Why not? After all, their lien is senior anyway. One answer is simply that they do not want to the borrower to be stretched to make their payments. Also they would sooner the buyer put down more cash or pay for mortgage insurance (a fancy way of saying a higher interest rate.) - Loan properly secured.
If your mortgage is a second mortgage, it should be a properly recorded mortgage or deed of trust to comply with your local laws. Any documentary and intangible taxes should be paid. Without this the mortgage may be unenforceable. - Title insurance.
You should have proper mortgagee's title insurance. - Rights with respect to first mortgage, if you hold a second.
If you are holding a second mortgage it should contain language to the effect that a default on the first mortgage is a default on the second. Also that you, as second mortgage holder have the right to check on the payment status of the first. - Interest rate.
Other things being equal, the higher the interest rate, the higher the price you will receive. But be aware of laws concerning Usury and Predatory lending. A below market interest rate will demand a hefty discount to be saleable. - Length of note to short.
Typically it is hard to sell a note with a short balloon, or a balloon due in just 6-12 months. The note buyer will be concerned that the borrower won't be able to refinance and pay them off.
But a loan with for example, 3-5 years to run, and a 30-year amortization is going to be saleable, other things being equal. - Length of note too long.
The note buyer won't usually want to wait 30 years to get paid off, but these notes can often be sold to institutional note buyers.
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Tuesday, November 25, 2008
Mortgage Note Buyers Helping You Get The Most Money For Selling Your Mortgage Note
All mortgage note holders want to know more about selling their mortgage note. Don't you?
Well, the popular way to get a lump sum of cash for your future payments is by using a mortgage note buyer.
Most people don't realize they have different creative options when using a contract buyer that can keep them from getting the most money for their owner-financed mortgage note.
It may seem scary or challenging, but truly it is not, unless you do not know the answer to this question.
Can I receive cash now and still hold part of the note? In other words, do I have to sell all of my note at once?
At first glance, this may seem obvious that this is the best choice because it will get you the most money up front. For some people, it is. When it comes down to it, it is up to you and your needs. If you need or want a large all cash payment and want to be out of the deal, rid of headaches and worries of a default buyer, avoid destruction of property, taxes and insurance, and would like a larger sum of money now instead of collecting small monthly checks, then a full sale is best.
But let 's take a look at some more needs. If you are just looking to get a
larger down or some money to take care of some immediate needs or
pleasures, then a partial payment may be better. Maybe you just want to
lessen the amount of strain or burden of carrying the note and would like to sell just a portion of each monthly payment. Then a split payment option will be better for you. (This way you can go on vacation, consolidate debt buy a new car...)
What is a partial? A partial is the purchase of a portion of an income streams remaining payments, or a purchase of a portion of a specific payment, or any combination thereof.
There are many times when this may make sense. Let 's say that you have a new note and it has not been seasoned (length of time that a note has been in place and paid on), it has little or no down payment, and has poor credit by the payer. In this case, it would be better to sell only part of the future payments. It will get you more money in the long run because the mortgage note buyer would have less risk should the buyer default on the note. Then after the note has experienced seasoning you could sale the rest of the payments at a much higher percentage.
Let 's look at an example of this:
Sales price: $100,000
Down payment: $5,000
Original note balance: $95,000
Payers credit: poor
Seasoning: 1 month
Appraised property value: $100,000
Term: 360 months
Interest: 10%
Remaining payments: 359
This is a low quality note because the buyer is not putting much money down,
the pay back period is very long, and the buyer 's credit is bad. But you could still make out like a bandit by selling it as a partial. Let 's say you sold the first 120 payments (10 years) for $51,000. After the 120th payment, the contract would be returned back to you. The balance owed to you would be $86,391.12. You would then start to collect the payments from then on. Let 's see how this looks.
Sales price: $100,000
Down payment: $5,000
Original note balance: $95,000
Contract written for 30 years @ 10%
Monthly payment: $833.69
Note buyer purchases first 120 payments for: $51,000
Total cash to home seller $56,000
(down payment + cash from note buyer)
After 120 payments contract is returned to you with a balance of $86,391.12
Total money to you: $142,391.12 (including interest). Not shabby for a house that sold for $100,000.
So, what is a Split?
A split is a purchase of a specified monthly amount. If you're getting to the point where you would like to enjoy some of the finer things in life, while still receiving a good monthly income, then a split payment is a great choice for you.
For example, if the monthly payment on a seller-financed note is $1,000, we could purchase $200, $500, $750, etc. of the monthly payment. This will allow you to get cash now and then still collect a monthly income from the note.
All in all, each situation is different and may need to be tailored differently to meet your needs. I can't say exactly what you will get for your individual situation, but I can say that you should walk away happy. Selling your mortgage note should be much easier and more profitable now that you are armed with some creative options.
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Wednesday, November 12, 2008
Most Often Asked Questions About Selling A Mortgage Note
Mortgage note buyers exist to help you create, sell and understand your mortgage notes, contracts for deeds, trust deeds, and promissory note both residential and commercial.
Below you will find 5 frequently asked question about selling your mortgage note.
5 frequently asked questions, that most note sellers have about selling their owner-financed mortgage note are:
1. How much cash can I get? There are many factors in determining the offer price for selling a mortgage note The main four are equity, seasoning, interest rate, and credit of payer.
The more of these you have in your favor the larger lump sum you will get. This is why many mortgage note buyers offer a free no obligation quote.
If you look through some of the questions there, you'll see that they are simple and only take a few minutes to fill out.
These type of questionnaires are designed to keep you from having to dream about how much money you will get. The coolest part about it is, if nothing else, you know how much money you could receive if you wanted it.
2. How do I sell my note? Selling your note is easy. The first step is finding and contacting a mortgage note buyer or contract buyer and simply telling them that you want to sell your note.
This initial contact could be by phone, email, or through filling out a free mortgage note quote form. More than likely, if you are reading this, then you are at a site that can help you get a cash offer for your note.
If not, then there is a link to a good website and company above, that can give you a "No hassle, No obligation" quote.
Once you give the contract buyer some required information, they will be able to get back to you, usually within 24-48 hours, with an offer.
3. How long does the process take once I decide to move forward? After you have given the mortgage note buyer the required information, either by calling, email, or filling out an online form, they will get back to you in 24-48 hours.
Usually, it only takes 2-3 weeks to complete the deal and have a huge certified check deposited, or wired to your bank account.
4. When I convert my note to cash, how will it affect the person(s) paying me? Not at all. The terms, payment, and amount owed stay the same.
This is a really neat thing about selling your mortgage note. You can get a large sum of cash and it doesn't affect the person(s) paying you. Sounds like a "win-win-win" situation to me.
5. Where would the closing take place? Usually, at the closest title company near you. Sometimes it takes place in the town or city in which the property is located...which brings up another question.
Do you have to be there for the close? Nope, not generally. The person handling the title and closing the deal can send you the closing package. This is all done to make it as convenient and as easy for you as possible.
As you can see, getting a large sum of cash now for your future mortgage payment is an easy process that can put a lot of money into your pocket for a vacation, to consolidate bills, and buy or enjoy any other necessities or pleasures.
Mortgage Note Questions - How To Sell Your Mortgage Note
When it comes to selling real estate, one of the biggest obstacles sellers face is a so-called “depressed” market. Even when a property is highly desirable, it can be hard to get the price you want in this real estate environment. You could end up losing a lot of time, money, and opportunities, waiting for a “perfect buyer” who may NEVER materialize!
The traditional solution is to drop your asking price. But this common strategy doesn’t always work in your favor. In fact, it can work against you, making your home seem undesirable and your position seem weak.
But there IS a way to turn this challenge into a profitable opportunity! I am not selling anything. I am in the business of paying cash for mortgage notes and trust deeds.
Keep in mind that it has to make financial sense. Although having regular income is a nice idea, there comes a time when you might need a lump sum of cash for an investment, a large purchase or just to pay.
A cash flow notes statement documents the amount of incoming and outgoing cash and its equivalents. Only cash sales are recorded in a cash flow statement – all future sales including those made on credit are not declared.
Most banks refuse to accept a short sale or modify the terms of a mortgage unless the owners are numerous months behind in payments. The homeowners come to the bank to ask for help to avoid foreclosure. Individuals sell structured settlements to get liquid cash. They can be sold to special financial institutions. The main advantage of selling structured settlements.
In situations where you are holding the sell mortgage notes and receiving payments from the sale of commercial and residential real estate, and you are want to cash in on those payments, there are service agents who provide help. This technique has been the key in making up an estimated 20% of all private note sales.
Right now, thousands of people across North America are stuck with investments that they don’t want. They would rather have the cash now! Whether it’s a real estate note created when selling a property, a business note created when selling a business or even a structured settlement, there are thousands of notes out there that could be turned into cash!
Get cash now and forget those monthly payments FOREVER! We work with buyers who are ready to pay top dollar for your notes. If you have a trust deed, a mortgage note or any private loan, it's time to find out exactly how much CASH you could be entitled to.
* It's Quick: Learn how to cash out in minutes
* It's Easy: You could have cash in just days
* It's Secure: Get real quotes directly from certified buyers
There has never been an easier or faster way to cash out of your investment. Whether you need money to pay bills... to buy a home... to fund an education... or even if you just need some spending cash... We'll show you the money for your mortgage note or trust deed!
http://www.smilingdogenterprises.com
getcashnow@smilingdogenterprises.com
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