Note Financing

Comments(3)

• 
  davehays6th September, 2004

  most note buyers who are serious will optimize their credit situation and then open up warehouse credit lines from which they use available cash to purchase the notes for their portfolio.
  
  The spread between the rate on the credit line and the yield on the note is profit for you every month.

• 
  Note_Buyer7th September, 2004

  All the lenders that specifically advanced funds sucured by paper I am aware of went out of business. Too many note buyers put too many bad (and some intentionally shady) deals in their line. The lenders were too loose with their practices.
  
  I imagine some warehouse lenders might help you and would give you the most liberal terms. I don't know if they would allow you to buy and hold.
  
  My line is with a local bank focused on small business. The bank also has alot of my assets tied up so I am cautious about what I leverage.
  
  Good luck and if you find a lender let us know.

• 
  JohnMerchant7th September, 2004

  Two or three things I percieve in answering your question:
  
  1. First, today, with the easy new bank financing almost anybody can qualify for new loan...so good seasoned RE notes are not so easily or quickly found, and the good ones are heavily overshopped by the myriad of new "Note Broker" grads from such as ANN, etc.
  
  2. Secondly, without lots of your own cash it's hard to justify your buying notes for yourself, with your own cash, if you're just planning to buy and hold. And if you're thinking the note business is going to provide you with enough income to offset your day job, I'd think again...most new note brokers are broke and gone within a year of their new venture.
  
  3. It takes a long time to develop enough good contacts with good notes to make anywhere near a living from note business.
  
  You begin to see the difficulties?
  
  Good, as if I can save somebody from jumping unprepared into really deep water, maybe I've done some good.
  [addsig]