This is a quick, little tip that I thought you might want to know.
As I talked about the other day in the post about seller financing, you can sell houses really quickly using owner financing – aka seller financing…
…But what most people don’t know is that you do NOT have to continue to receive those payments over a long period of time, making this strategy an extremely useful and profitable quick turn real estate investing strategy.
Because once you owner finance a mortgage note, then you can sell that mortgage note for cash. Yes, you will have to sell it at a discount, usually 6-13% or so depending on a couple of factors about your buyer like: down payment received, credit of borrower, time on job, and debt to income ratio, but you WILL get cashed out within 30 days.
This allows you to owner finance houses, and then get all cash within a very short amount of time by selling your mortgage note to a mortgage note buyer or broker.
It’s kind of similar to the requirements that banks have, EXCEPT, there’s a huge difference. The company or individual that will be buying your mortgage note doesn’t care about all the red tape that banks do, doesn’t have to abide by all the same regulations, and they are not as problematic. If there is an issue, you may have to discount the note a little more, but you can still get cash.
The better your note, the less of a discount you have to take. If the borrower has better credit, a larger down payment, longer time on job, or better debt to income ratio, then you’ll get more cash for your note and you won’t have to discount it as much.
Why do they buy notes? For the same reason that banks make loans. Let’s take a $200,000 loan at 7% interest. The bank will make about $279,016.00 over 30 years of profit on one loan. If one company only did 1,000 loans, they would make $279,016,000. That’s a lot of money.
This is why they don’t want houses back. They don’t want to foreclose on them. They are not in the real estate business, they are in the loan business. This is why mortgage brokers will buy your owner financed mortgages.
They even give you different options. You can sell all of the note, some of the note, or the whole thing. They work with you on whatever it is you want.
Quick Turn Owner Financing
Here’s the deal: You run an ad that says, “Owner Will Finance, No Banks”. Don’t forget to put a few other buzz words that will help sell the house and your phone number.
Then, when negotiating the deal, you really need to get 20% down. This is the most important factor in selling the note, next to their credit score.
Now, to get their credit score… you can have them pull a new report, you can become a part of a credit union, or you can have a mortgage broker or loan officer do it. This might cost a small fee, but it’s worth it. Just make sure that before you close the deal, you do pull the credit.
Anyway, I hope this little strategy makes you a ton of money and adds a little more fire to your investing arsenal.
To Your Immediate and Lasting Real Estate Investing Success,
P.S. Oh yeah, the reason it takes about 30 days to cash out now is because that’s how long most mortgage buyers want the note in place before they will buy it. Once the real estate market gets back into order, you’ll be able to sell the note, probably, in less than a couple of days.
- Seller Financing Secrets
- Lease Option Secrets
- How To Find Buyers Before You Have A House To Sell
- Secrets Of House Flipping
- A Lesson From Jason Loucks – The 7 Day Sale Guy