BiggerPockets

http://www.biggerpockets.com/blogs/241/blog_posts/620-mortgage-note-buyer
You can also send me an e-mail and request more info. I see you are in IN. I am in SW MI. Always good to network with a like minded investor!

That side of the RE industry, often called the "Cash flow industry" has slowed down.

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Basically you would have to sell the property to someone and their credit history is probably of utmost importance in determining the "discount" that you would have to take.

It is almost the same thing as discounting the house enough so that you can sell it, but instead of doing that you sell at full price to the buyer, then take a discount on your cash on the back end by selling your note.

The true advantage of this is that it keeps the "comps" in the area higher because the sales price was higher, even though you settled for less in actual cash on the back end.
Of course the int. rate, length, pmt history, balloon are other factors.

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We do this on a 5 year ballon.

If you own the homes free and clear. Sell them hold the note and enjoy the cash flow

Ralph I just read Tims post again and you could be right, Tim might be looking to refi for cash out of these properties. If this is the case he wouldn't be creating a note at all. He would be looking for a lender, not a note buyer and these are two completely different occupations. If Tim finds a lender, the lender will create the note and terms for Tim. Most note buyers would not be interested in this deal because they don't make loans they buy existing notes at a discount.
Tim what are you looking for? Do you want a loan or a way to sell your property using seller financing and then selling off all or part of the income stream from the note(s) to raise capital to buy more properties?

Tim, please clarify, I find this tread very interesting as I am considering the same strategy. :D Jim

Ralph,

Creating a "saleable note" is really easy to do

By selling the home you're a lien holder (mortgagor) and the beauty of selling is that you'll use 100% of the value because you'll target a borrower (mortgagee) that can't get conventional financing...

That means a higher rate, demanding of 5-10% down, and terms that best suit the seller and investor. This is not a hand out or charity!

The note is likely to achieve 65-85% on the open market depending on seasoning, credit, LTV, rate, and term...
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Refinancing at a 50% is simple to do and would be an opportunity to draw quick cash but then holds Tim responsible to UW guidelines! Very tough on 4 properties and the ratios that would be involved

Hey guys,
What was in my mind initially was basically refinancing. I spent a very brief period of time in the mortgage business, but did learn in that time that refinanced loans are sold between banks just as purchase loans are. Basically I was thinking a parallel to that on the private market. Sure I could find a lender, but I also could make out with Christy Turlington. The reason I was looking into the prospect of making these notes saleable was to create them, then contact private note brokers and let them find the end buyers who would be in the end the "lender" - but I'm using a larger network of contacts to find those lenders. Make sense?

Tim

This seems like a HUGE opportunity for a Note Broker to put together a webinar for the BP Nation!!!!

~Harrison Painter

Sorry if I came off harsh in my last post. SummerHomes you are right Tim is looking for a hard money or private cash out refi. This is a laon and has nothing to do with creating or selling a note on Tims end. What you are looking to do here is to sell yourself and your companies programs and investment potential to private money (these could be your relatives, local investors, folks from church, etc.) investors. If you can get them to believe in you, you will be able to negotiate a lot better terms with private lenders then w/ hard money guys. Be careful here. If you are going to issue your own note against the property and then try to sell that note at a stated return you will be violating securities laws.

Right on the money, you have to make sure you are working with accredited investors. You can't just go out and advertise that you are creating "notes that will have X for your return" to the general public unless you are a securities dealer. I am sure there has to be a way to incorperat a securities dealer into the process to make it legal but, I wouldn't go at this on my own.
There is no problems right now in most states for using seller financing as a way to move properties, creating a note and then selling all or part of the note to raise capital or keep the capital flowing. To do this all you need to do is work with an expercienced note broker or go directly to the institutional note buyers. They will tell you what they are expecting. Personally a good note broker is the best bet, in my not so unbiased opinion, because they know who all of the most competitive buyers are and who would be most appropriate for the offerings.
Getting into issuing notes or offering returns to private investors is a tricky business and not one that most note broker, including myself, would be qualified to help you with. I suggest you talk to a securities broker/dealer, that understands real estate, to do what you are trying to do. I know several folks who have gotten into hot water doing this on thier own. I would be interested to hear what you find out or what other have to say.