Hello all. Looking for feedback on pros & cons of creating owner financed notes as strategy for selling rehabbed properties. I am part of a small group of investors that would like to purchase, fix & sell REO properties to home buyers by creating owner financed notes and then selling the notes to larger investors seeking cashflow. We have the ability to create & sell the notes, what I need to know is whether or not we need to be licensed as lender for doing this. We plan to create 10-20 notes per month. If so, are there some commonsense workarounds that will make this a viable business strategy? How can I do this and be in compliance with the SAFE act?
I would question your ability to make a profit with this plan. Most note buyers are going to want a discount on a new note, and I would think that this discount would wipe out any rehab profit you made.
Have you found differently?
–Natalie
Paper Into Cash
The definitive home-study course for
structuring seller-financed transactions while
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For Natalie
Hi Natalie,
Here’s an article I wrote a looong time ago, which is why the investor’s yield was so high:
How to Create Your Own Mortgage
JP
Great info, JP, thank you. I have experience lending on investment properties, so I agree, it’s a win-win for everyone.
My concern, though, is the poster’s business plan of seller financing his rehabs, and then selling off the note. I can’t see any note buyers consistently purchasing unseasoned notes without a deep discount. I would think that the discount would erode away the profit from the rehab.
Anyone agree or disagree?
–Natalie
Owner Financed Notes
Hello…
SAFE act - just contract a loan originator and for a few hundred $$ he/she can prepare all the docs and you’ll be compliant. We do that for our wrap sales.
Side note: you may be leaving a lot of money on the table because as Natalie mentioned, the note buyers will want a discount, which for unseasoned notes may be too large and kill your profit.
best,
marko