How Long Does It Take?
I have yet to use private notes in my real estate investing business. If i were to construct a note for a seller so i can purchase their property, what would be the time frame for the seller to take that note and sell it for cash? can this be done quickly so as to purchase a property prior to a foreclosure?
Eric
I am not sure the context of your question, however, it seems as though your seller wants cash in time to purchase another property (prior to foreclosure) and is therefore reluctant to carry back a note. If this is the case, you might try to work out the terms of the note. Set up the sale contingent on finding a note buyer and post the note for sale on sites where notes are advertised. Part of your ability to do your transaction depends on when the foreclosure is due to take place. If my response is wide of the mark, perhaps you can give is more details.
well the construction of the note would just be enough to yeild the payoff amt of the property. is this truely a viable technique to purchasing real estate? simply creating an owner financed note and then assisting the owner to sell that note to payofff the property? i just cant imagine its that simple, ive read articles on other sites that say it is. anybody with real life experience?
Eric
I assume that the payoff you are referring to is the payoff that allows your seller to purchase the foreclosure (not a payoff on the property you wish to acquire). Keep in mind that the note will be discounted when it is sold and it is the discounted amount that the seller will have to acquire the property in foreclosure.
This type of transaction is not uncommon. There are three people with different needs.
A) A buyer with little cash
B) A seller who has equity that needs cash
C) A person with cash that would like an income stream
well actually i was refering to the sellers property in foreclosure. here is a theoretical example,
fmv-110k
forclosing mortgage balance-75k
my owner financed offer-85k
my question is can the owner take that 85k note and sell it at a discount to payoff his foreclosing mortgage. thus allowing me to get into the property with no money down?
eric
A difficulty in what you are proposing is that if you find someone with $75K cash, the $85K note goes behind the $75K foreclosing note on a property worth $110K. This is not a comfortable position. In addition, there needs to be some control of where the money will go. It needs to pay off the $75K.
You might be better off trying to find someone who will lend you the $75K (with a payoff of $85K or possibly less) where the proceeds are used to pay off the foreclosing lender during the purchase of the property.
i guess i was envisioning a double closing in escrow. the seller sells the note for 75k then those funds are used to payoff the foreclosing www.lender.thus creating a 1st position for the 85k note. i know this may sound farfetched i was just trying to think of some creative solutions to create win/win/win situations.
eric
The $85K note is in first position the way I proposed it in my last post. When the smoke clears, the results are the same. You are the payor on an $85K note owned by a third party and you own the house. This way you avoid the double escrow closing. If your numbers are real, you are also likely to get the $75K cash by creating a note for something less than $85K. The loan to value is 75/110 = 68.18% which is fairly conservative. Your issue is that you need it fast because of the foreclosure so you are likely to pay some premium. Does something like this work for you?
everything works except for the fact i havent built up my private sources for funding yet to make such a loan. i have been doing bank financing for all my deals along with little or no money down techniques. losing a couple of deals because of my inability to close fast (within 2 weeks) has made me search for alternative ways to finance projects, out side of hard money.
eric