Creative Strategy to Buy/Sell/Flip Property

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Creative Strategy to Buy/Sell/Flip Property

 

Using owner financing can be a great tool for those trying to buy properties and for those trying to sell properties quickly. Buyers can benefit because there are not special “hoops” to jump through and the closing process is usually much more simple. Also, they can purchase properties even when they normally could not (i.e., self-employment, low down payment, proving income, etc.)

 

For sellers, offering owner financing can widen the pool of buyers and help to sell property quickly. The problem is most sellers don’t want to carry the note. They want cash to pay off existing liens and/or to purchase new property. We solve this problem . . . Sellers can easily set up owner financing for their buyer . . . and then sell the note at, or right after closing. All notes are always purchased at a discount depending upon the type of property, the note terms, and especially the buyer’s credit. So, again . . . if your buyer can get traditional financing, that’s usually the better alternative. But if not, we can help sellers structure the note to minimize the discount and get the cash they need at closing. Underlying liens and other payoffs are paid off from the funds right at the closing table.

 

This strategy can also work for flippers whereby the flipper structures seller financing for his end buyer and we purchase the note from him. The funds are used to pay off the original seller and the difference goes to the flipper.

 

The first thing everyone wants to know is how much the discount is. After all, that basically determines how much cash goes in the seller’s pocket. Like everything involving mortgages, the answer is dependent upon many variables (credit score of the buyer, down payment of buyer, LTV, interest rate, property use, etc.) But, to give you a rough idea of the payout, we try to structure new notes so that the seller ends up getting a purchase price of around 90% of the mortgage balance – plus the down payment from the buyer. So for example, if the purchase price was $110,000, the buyer puts down $5,500, and the seller financed mortgage was structured at $104,500, we would try to structure the note so that we would pay the seller about $94,050 (104,500 x .90) for that note. He would also receive the $5,500 down payment – for a total cash amount of $99,550, less his underlying liens and payoffs. The payout could be higher or lower depending upon the terms being more favorable of less, respectively.

 

So . . . if the seller is willing to accept some amount below the appraised value, we can pretty much structure the deal so that the seller gets the total amount of cash he is expecting. We do that by increasing the Sales Price enough to cover the discount. As long as the property appraises for that final Sales Price value, this technique works.

 

We also purchase individual and pools of notes, mortgages, deeds, and contract for deeds (land contracts).

 

We are a principal investor of seller carry-back mortgages and trust deeds. We either purchase for our own portfolio or work directly with private investors.

 

Shawn Quick/ Easy Private Mortgage

# 410-671-4569