Monday, May 5, 2008

Creative Finacing - Note Buying & Selling

Do you own property, create lease-options or have monthly income you’d rather have a lump sum of cash for?

If you own property you wish to sell in this tough market, you probably already know that bank financing can be hard to find for any buyer even those with good credit to obtain. One solution is for the property owner to get creative and offer seller financing to potential buyers in order to sell their house or land more quickly (and at a higher price).

While applying seller financing techniques isn't more difficult than traditional real estate sales, it is important to recognize that the buyers looking for seller financing represent a different target market than typical bank-financed customers.

Once seller financing or the ‘note’ is created, the process for obtaining a lump sum cash payment varies from the conventional real estate closing technique as well.

Now you have monthly income which you may- one day or immediately-prefer to have a lump sum of cash for

Perhaps an immediate need arises for more cash than is available from the scheduled principal and interest payments you are receiving. In order to quickly obtain a large proportion of the money due from the loan you’ve just created, you could sell the monthly note payments to a buyer for a lump sum of cash. By locating someone willing to buy the note payments, you will have ready cash for any pressing financial need.

This is where I, your friendly note finder, come in. In the secondary finance industry, a unique group of individuals exists who specialize in locating note buyers. These cash flow specialists - often known simply as "finders" - have a unique understanding of what most buyers are looking for. These finders are happy to work with agents and their clients. Many of them utilize online marketing and have Internet websites to facilitate the buyer location process.

The best of the bunch also look in the newspaper for property sellers offering financing, so sometimes a good finder will contact the seller if their property is advertised as FSBO. Finders specialize in helping property sellers locate buyers for secured notes.

Once in contact with a finder, the seller should explain the details of the situation. While note finders won’t be able to offer any legal advice or assist with the creation of a note, they are qualified to give general recommendations about what types of terms are attractive to note purchasers. Most importantly, note finders will be able to help locate a buyer for a newly- created cash flow.

Remember, these finders are not note brokers, meaning they will not "show" the seller's note to buyers or act as a representative. They will only pass the information along to someone who would be interested. Once a commitment to purchase the cash flow has been established, the buyer will step in and complete the deal.

When working with a property seller who needs a lump sum of cash immediately after selling their real estate, contacting a finder early in the process of creating a real estate note makes sense. By involving a qualified note finder BEFORE a note is created, the property seller can receive invaluable input about the payment characteristics that note buyers prefer.

Fulfilling a Seller's Need for Cash

In order to streamline the seller finance sale situation, it is advisable to have potential buyers for the newly-created cash flow ready. A note finder can start looking for buyers before the note is created, or even before a seller-financed buyer is "lined up". This way, you could have a buyer for the payment stream ready to make the purchase as soon as the new private mortgage is created.

Locating the Right Note Buyer

On your own, you might wonder, what is the best method to find these note buyers? In stark contrast to locating seller-finance buyers for the real estate itself, a classified ad in the paper is not the best option. Most people looking to purchase a stream of monthly payments do not look in the newspaper for potential cash flows to add to their portfolios. An alternate marketing strategy is required for finding note buyers. This is the job of the note finder.

In recent years, the Internet has become the best place to find cash flow purchasers. Using keywords such as "buy monthly payments" or "buy mortgage payments" at a popular search engine website should lead to many interested buyers.

Sometimes there are so many potential buyers, it can be difficult to figure out where to start. Also, cash flow buyers tend to have distinctly different financial parameters; an opportunity that meets the needs of one person perfectly may not be attractive at all to another. Here again, it is often best to work with someone who could give you a general idea about how notes should be structured- your friendly neighborhood note finder.

Without this knowledge, the property could sell quickly with the creation of a new note, but you might end up collecting the payments long-term instead of being able to quickly "trade" the future payments for an upfront cash settlement. If you will need a large amount of cash quickly, it makes sense to plan ahead for a buyer to purchase the cash flow and involve the services of a note finder.

Another creative solution to selling a home or commercial property is to create a lease-option

But again, when your need for cash arises, you may want to assist your tenant by creating a note so they can purchase the property and then you can sell this newly-created note immediately at a simultaneous closing to obtain cash. Everyone wins. With this situation, a note finder can assist in the same way as explained previously by adding input as to what note buyers prefer so as to avoid delays in obtaining your cash.

I would look forward to talking with anyone interested in any of these topics. I am always glad to try to help-please contact me. There are articles similar to this on my website, I can send you informative newsletters regularly (a $29.95 value FREE to members of LandlordAssociation.Org) and I can be reached via my website at www.NoteFundingResource.com. Thank you for you time and I wish you all the best!