i have started carrying some paper on a few properties. i am interested in finding a loan servicing company… any ideas? typically, what can i expect to pay?
i love this board ;D
Hi Roger -
Both of the other posters are experienced investors and have given you a couple of great sites from which to choose.
That said, what exactly is it that you think a loan servicing company (or agreement) is going to do for you?
You may want to rethink your strategy. Paper is often held not because it’s wanted, but because its considered “necessary”. That doesn’t mean holding paper is a bad thing – I happen to hold quite a bit of it myself – but you should have an exit plan that can be executed in a moment’s notice (well, maybe not but you get the idea).
Paper is valued most by those who deal in it everyday. That includes financial services firms (of all kinds), banks, credit unions, etc.
The point is that people value what they understand.
I’ve been successful in getting smaller banks to play servicing agent for me many times. Often, their attorney writes up the original deal on their “standard paperwork”. Their loan officers make suggestions, run credit checks, charge “fees”. Are you getting my drift here?
Who better to take care of these “details” than a small bank who does this day in and day out.
And what better way to make the bankers think of me in a whole new light – not exactly one of them, but someone who definitely understands their business.
Of course, I do have an exit plan. And it is in place from the moment the docs are signed.
I’ll bet you can guess what it is, right?
You take care now,
Eric C
Eric,
Thank you for your unique insights. I appreciate your position on carrying paper and I will take it under advisement. You are correct, I don’t like the hassle of carrying paper but I love the returns. However, I have a unique set of circumstances that make carrying paper a good alternative. First, I buy tax sale property. In my opinion, the biggest problem w/ tax sale property is the inability to obtain title insurance and thereby reasale quickly and for a profit. Therefore, I need a method by which to sell the home w/out title insurance… carrying the note makes the most sense. After a few years pass, I’ll sell the note. Hmmm, I wonder if the note buyer will want title insurance? anybody know?
Hi Roger -
I can’t say that today’s Note Buyer will require Title Insurance or not – in the past, some did while others did not. A lot depended on the quality of the deal (principals, property, terms, etc) and quite a bit on your reputation.
That may have changed.
I don’t really know because I don’t sell my paper for anything less than par which means I’m not up on what the Note Buyers will or won’t do anymore.
I think you’ve got a great plan with the tax sale properties, but please don’t kid yourself – the situation is not unique. Again, I have to stress that most paper is created simply as a result of a transaction that can’t or won’t fall within the normal guidelines.
That’s a good thing – for me anyway and from what I’m hearing you say, you think so too.
Just remember that you don’t HAVE to sell anything (paperwise) if you don’t find it necessary to do so. And you may very well want to plan so that you NEVER will find it necessary.
I’ve been doing this stuff (including defaulted properties) for over thirty years and I haven’t had to sell a note yet.
Simply put, there was never a need to do so.
Take care,
Eric C