I am a buy and hold investor. I never thought I’d post on this thread, so I apologize if this has been discussed. I only buy and hold. But it costs money to buy, so I would like to open my mind to flipping just so I can buy and hold more properties. Now that I have been investing for years I have learned mountains of information on the importance of buying only great deals. So here is the question.
I can find great deals and negociate like a champ. Can I still buy great deals and sell them just cause I was able to find a great deal, or do I have to hold the property for a year before I sell it for a profit do to lending requirements? THANKS!!!
:cool no you can buy and sell all you want the key is how you sell ///
IF you buy for 70% or less and if you have rehab do it /// find out what thenew apprasial is and the sell it for full value this is done with owner finance and all ways get 5 to 10 % down and then find a note buyer who buys new and old notes even unseasoned ones !!
THEN sell sell that note sure there will be a discount but if your buyer has fair credit you will get a smaller discount on your paper !!
I have been in the bussiness for over 12 years and just in the last 5 have we been buying and selling and financing our own sales // as well we have got hooked up as a rep with a super broker who buys all our notes :beer
Very interesting real estate 001. Using seller financing to by pass the lending requirements is interesting. Lets use an example just for fun.
I buy a $100,000 property for $50,000. Then I sell it two months later for $90,000 using seller financing. So I sell the note to the people that buy notes. What would these people that buy notes pay for this? Please use examples with numbers. THANKS!!!
More like this: You buy a $100k property for $50k. Sell for $110k with seller financing. Note buyer pays you $90k for the note.
You can also hold onto a few of these for some no-hassle cash flow which I’m sure would be a nice change from landlording. Just refi your investment back out and do it again.
Doug Pretorius…I’m guessing the “no-hassle” cash flow is from ‘being the bank’…I’m also thinking that if you set it up correctly the buyers mo payments will exceed the mortgage your paying(as the seller)
:cool okay iron will give you one we just closed last month with the #s
WE got a call from a man in foreclouser and he was laid off his job // no way he was going to get payments current . SO he just wanted out so he could move back home where his family was at . HE did some paperwork with us where buy we would buy his property a nd pay off his old mortage // and we would give him some moving money
SO this is the way the # s went current mortage pay off was 85k was apprasied at 200 k by the bank 60 days before we agreed to have this all done in 60 days or less
a ) we made a note with the seller for 85 k
b) we then went to our list of buyers and found some one whom had been looking for a 4 bd / 3.5 ba and made a contract with them for the full appraisal value ( had problem credit ) with 5 % down 10 k
c) we then sold the note with our buyers to our note person ( broker) for 85 % of face value 161.500.00
d) we then paid off the bank mortage of 85k
e) paid some move money to our seller as promised did some cleanning and paint 10 k
f) we walked away form this deal with 66,500.00
WE do this as i said all the time at least two and sometimes three every 60 to 90 days !!! I do not know about you but if you only did one every 60 days the pay is not bad !!!
hope this helps you out iron
hey RE 001 that sounds awsome!!! Just a dumb question though…you sold the note your buyer signed with you(for 200k) to your note broker, right? And, do you have your RE attorney draw up the ‘note’ or is there another entity that specializes in drawing up suck notes?
Jay
So here’s the steps:
1. Find a deal
2. Buy it through whatever means
3. Sell it using seller financing
4. Sell Note to note buyer.
Sounds straight forward, but the part that is unknown for me is the selling of the note.
-Are your note buyers local investors, or are they found on google?
-What do note buyers look for in an investment?
-How much equity do note buyers want?
-What are the types of properties they prefer?
-Do they care how long you have held the note, and what documentation do your note buyer want on the people who are living in the property? THANKS AGAIN!!!
:cool hey just wondering jay why you would say suck notes ??
this is a wonder to me // but to answer your question yes they are done by our lawyer some people just want the good old dream and they can have it with us as we work with there sucky credit !!
:cool okay iron we have a contract as i said with a national note buyer and two or three others we use as well but sometimes yes we do sell to a local person /// we are just looking for our best and fastest buck on the deal
note buyers can be looking for one type or another at any time some times sfh and other times commercial // how ever our maine note buyer will buy just about any note as long as it is all done and docs are right likes 1sts over 2nds
equity is not a factor as they some not all will buy new notes with no equity and some want some there or will not buy /// our as i said note people will buy our notes with in days of our close
just as i have said if you can get all the papers and the note form close to a note buyer then you can sell your note and be in and out in 60 to 90 days with cash in hand
i would like to help you get your deals done as we can and would sponser you with our note broker so you can get your notes sold clean and fast // if you would like ?
oops…better check my typing next time…“suck” notes should read “SUCH” notes…a totally different meaning…lol. A question tho, since you do work with high risk credit folks…and you sell the note to a broker…if the buyer stops paying, who forecloses…you or the note buyer?
:cool the note buyer of course as i have been cashed out of the deal
the money is no longer owed to me /// i got mine and am on to the next deal
in 5 years we have only had 2 people have to have aour note buyer go after for the money :biggrin
I buy a $100,000 property for $50,000. Then turn around and sell it for $110,000 using seller financing. Then sell the note for $90,000. My profit is around $40,000 (minus some costs).
Why doesn’t the note buyer just buy the property, what do they need us for? Are they going through us in order to get a small discount?
Do they need special seller financing forms, or can I just use the ones I have? What details are needed in order to not get screwed?
THANKS!!!
Iron,
The best way to get your answers about the note buyers is to contact a few note buyers/brokers and ask them directly. I’ve spoken with a few over the years and most are very willing to tell you how to set up the loan/docs in order to get the best price. I’ve got to say, though, this concept has interested me for a long time, but I’ve been pretty gun-shy of it because every broker that I spoke to about buying would NOT guarantee the buy at closing. That made me very nervous.
I did do one similiar deal with a local note buyer, but I had to take a 20% 2nd, and then he would buy the first for only a 5% discount. Still, that’s 25% discount to get the deal done.
Why do note buyers do it? That one is simple. That is the way that they choose to invest their dollars. They don’t want to go around looking for houses to fixup and resell. They want passive income. Notes do that. You have to keep in mind. The average notebuyer isn’t the middle class guys like us, Iron. Most have a large amount of ‘investment’ dollars and this is the best way for them to get the highest returns with the smallest risk. Real estate is still good collateral, especially if it’s discounted 10-25%. Add to that that the usual interest rates for these loans are 10-12%, they have a pretty good, safe, investment.
Raj
Just wanted to add, if you prefer to do it ‘more conventional’ or just as an added option, you could do the following.
Offer additional owner financing option. If the seller qualifies for, say a 90% loan, offer 10% 2nd note to get the deal done.
Using your example: you sell $100K, buyer gets 90K 1st loan, and you have a 2nd note for $10K
You still get $40K (minus your costs) at closing, plus you’ve got a $10K 2nd on the property that is bringing in monthly $$$ every month.
Most lenders will allow you to hold a 2nd to make the LTV requirement for them, though some will still want the buyer to have some funds in the deal, either in a downpayment or by paying closing costs.
A $10K note at 10% nets about $85/month in interest. Setup the 2nd for a call within 2-3 years to collect your $10K or just sell it to a note buyer (though 2nds usually go for 50% of value or less depending on the buyer’s credit and how long they’ve been paying it).
Raj
Good info Roger, thanks. I like the idea of calling a note broker directly in order to see what details they want in a deal.
I have thought of some of the concerns you mentioned. My back up to those concerns is to buy only properties that I could rent out and still make money. So if the note buyer backs out I can just hold the note and make a little money, or I can rent it out and make a little money. So I’m starting with properties that can cash flow as rentals. If it works then I’ll use it for more expensive SFH.
Well, the real problem with the note buyer backing out of buying the note is what happens if they back out at the closing table?
Maybe you’re buying your properties with cash or with non-lender’s funds, but most of mine are purchased via a bank note.
Just because your note buyer decides NOT to buy the note doesn’t mean you can back out of selling the house via owner terms. If you have an underlying mortgage, then you’ve created a BIG problem (for you). And that’s what scares me about them.
And RE 001 may have found better note buyers or better credit buyers or maybe just been in the trenches long enough, but the best offer that I ever got for a note bought at closing was 75% of the value of the note.
Raj
Real estate 001, where do you live? I would love to get some help from you. I’m new at investing in real estate and I feel like I’m just stuck and don’t know what to do. I have found good deals but just don’t know what to do after that. Thanks
:cool dustin iam in the northwest part of the usa as in washington and oregon but i have worked and do work with people all over the usa as real estate has many basic things that are the same no matter where you are ! AND you must have them or nothing else will work !!
SO yes iam will ing to help you out if i can