BiggerPockets

Hey All, I am new to the BP. I am looking for some recommendations on software that can be used to track multiple owner finance deals. I have looked around on the web and not been real impressed with what I have seen. Can somebody please provide a recommendation. Maybe this is not the right forum for this type of question?

Thanks!

I spent 25 years in the business of servicing owner financed notes, so naturally, I think you should use a servicing company to have them take care of your notes. :) A professional servicer can collect late fees, calculate correct tax and insurance impound payments, pay the taxes and insurance, and make sure that everything is reported correctly to the IRS. Also, if there is a disinterested third party servicing the note, there are fewer disputes between buyer and seller about balances.

The company I used to work for is Weststar Escrow. (www.WestLoan.com) They have offices from New Mexico to Alaska.

For handling a few loans on your own, you might want to look at Note Smith (www.NoteSmith.com) It works well if you have fewer than a couple hundred accounts. Not only does it do a good job of calculating principal and interest and handling all of the monthly tasks, but it has the software to print the 1098 and 1099 statements required for the IRS.

jay

Dear SI,

Here is what we do in New Mexico, and I am sure that something similar can be done elsewhere. (Your attorney will let you know what you can do in your state.)

The instrument we use is a Real Estate Contract. It is similar to a Deed of Trust. Title does not change hands until the contract is paid off. The contract servicing agent holds two deeds in escrow. There is a warranty deed that will be released to the buyer when the contract is paid off. The second deed escrowed is a special warranty deed giving ownership back to the seller. This deed is released in event of default by the buyer.

The terms of an REC says that if the buyer is even one day late, the seller has the right to put the buyer "on demand." This means that the buyer must catch up on all payments, including attorney fees for the demand letter, within 30 days or the property goes back to the seller. No foreclosure. The escrow agent releases the deed, you record it, and the property is yours.

This is another reason to use a servicing agent as a disinterested third party between buyer and seller. The servicer can act as an escrow agent.

If you would like a copy of the Real Estate Contract form we use in New Mexico, send me a note. You can find my contact info in my profile.

Also, I am creating a school in which I teach owner finance concepts and techniques to people like you. Again, you can find info about the school in my profile.

Have fun...

jay

Hoo, Boy! Texas!

Yup, you gotta mind your Ps & Qs in Texas.

They have a law that says you must provide a year end statement that has more information than is required by the IRS. The IRS says that if you don't file Form 1098 in a timely manner the fine is $50. Texas law says that the penalty is $50 PER DAY!

The company I worked for got into a lawsuit because of this law. A sleazy lawyer found a couple to claim that they did not receive their statements two years in a row. On a house worth $50K, they sued for a quarter million dollars!

We eventually won the case because it turns out that the couple doesn't speak English and they had their nine year old daughter going through the mail determining which pieces of mail were important to read. Also, we had proof that we had sent the statements. But it cost nearly $60,000 to defend ourselves.

We shut down our El Paso office because it wasn't worth the misery.

Sorry. That got a little off topic, but mentioning Texas laws hit my hot button.

I echo Frank's advice about price. It's only one aspect of the deal.

Have fun...

jay

One more thing. Does anyone know the legality of having a buyer sign a quitclaim at closing? Anything not kosher about that? Also, Southeast Investor, one of the great selling points for seller finance, besides the buyer not having to go see a scary banker, is that I structure the monthly payments, with tax and insurance, a little less than people in the area are paying for rent. This appeals to a lot of people.