Residential Real Estate Note & Mortgage
We have designed this convenient online quote system to facilitate the process of quoting, purchasing and funding the transaction. This allows you to receive your cash more rapidly without the inconvenience of using a less experienced investment group.
We recently purchased a note in Illinois. The buyer moved to another state after the sale and there were many issues about the property (missing section of roof) and the transaction that we discovered along the way which were not revealed at the initial interview. As we proceeded with the purchase I had to remind the note seller several times that had he informed me of these issues on the front end we would be much further along in the process. When it was all said and done the seller had his money and we had a good note.
Although, neither party was happy with the process due to the additional time and trouble we had to go through to close the deal. If you’re selling a note, inform the note buyer about all the issues pertaining to the note and the property up front because they’re going to find out eventually at some point in the process.
If you’re the owner of a real estate note, my guess is that you are either a savvy real estate investor or someone that was sold on the concept of owner financing because it seemed to make perfect sense to finance the sale of your property. After all, if the buyer defaults you simply take the property back and resale it – what a deal. Sounds easy enough but as anyone over 50 can generally attest when it comes to selling property and making money – very seldom is it easy or simple. So what can possibly go wrong? Today we’ll focus on the obvious and on our next couple of blogs we’ll expand on other possible problems you probably didn’t consider and their possible solution.
Default – Always a possibility, even with a buyer who has excellent credit. You need to ask the question before you sign on the dotted line, if this guy has excellent credit, why is he utilizing owner financing. Maybe his credit score is great but he’s over extended. If they are credit rich and cash poor expect your payments to be slow and consider default a real possibility.
Slow Pay – Almost a given unless you are reporting the note performance to credit agencies. Make this a positive thing with the buyers, tell them up front that they are going to be so happy because by paying this loan on time it’s going to help their credit score because you’ll be reporting the loan status each month to the credit agency.
Delinquent on Property Taxes – Very common with owner financing as property taxes are very seldom escrowed as part of the payments.
Insurance laps – Very common with owner financing as insurance is very seldom escrowed as part of the payments.
Property is getting run down – It’s always a good idea to get references on your buyer’s last two residences to avoid selling to a demolition team.
Possible criminal activity – Unfortunately it’s a greater possibility than ever before, background checks on your buyers may sound a bit intrusive but consider the downside.
Every step of this process from the original online quote submission to the final cash payout is designed for your convenience and speed of funding. We hope you enjoy the online convenience of selling your real estate note and look forward to your valuable feedback.
Lump sum payouts can be very helpful for times you want all your cash.
It doesn’t take long to realize that when your buyer isn’t making payments you’re now not only in real estate investment business but you’ve just branched out into collections. When your dead beat buyers stop taking your calls (and they will), you’ll need to go by the property to see if they have vacated, sublet or stopped maintenance. None of these are good so despite not wanting to face the music – face the music, you’ve got real money at stake. The worst thing you can do is procrastinate. After all you knew before you agreed to become the bank for these people there was a potential downside to this owner financing thing.
So how do you make lemonade out of your nest of non-paying lemons. There’s real opportunity if you secured a large down (eg. 20% or greater) at closing because they have real skin in the game, unless the down payment money was inherited or gotten illegally. Approach them with an offer to pay their deposit and first two months of rent in a nearby apartment, provided they leave a.s.a.p. and leave the place immaculate. If they accept, you get your property back in good condition, you keep the down payment, with a little elbow grease and some minor improvements you put it back up for sale.
If you would prefer to work directly with a consultant over the phone, simply call our toll free number and a friendly representative will walk you through the process. Or fill out our confidential funding application.