Loan servicing for seller financed notes

Loan servicing for seller financed notes

Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes

As a buyer, I love seller financing because I can close quick/easy. Then, once I own the property I can take my time to work with a lender to get it refinanced. A bonus is the lender will normally (re)finance based on the appraisal, vs. your purchase price. This has resulted in a lot of 80, 90, or even higher % LTV

I also like it as a seller since I can sell to someone without having to deal with all the time and work involved when a buyer is using a bank.   Then the buyer can take their time and refinance at their own speed.  If it takes them 30 days, 60 days, 90, 120, etc. it's no problem as they already have and are operating the property.  

But now the question:  I've seller financed a lot of deals.   I hold quite a few notes.  I'm not worried about their performance since I only loan on properties I'd be happy to own at the amount the loan was done for (and typically I'm loaning properties I sold so worst case, I get it back and my cost basis is lowered by their down payment).  However, since this isn't my core business, managing them sort of sucks.  I don't have software to do this (beyond using my property management software to allow them to make payments, and a spreadsheet to manage loan start/end dates, any changes to rate based on bumps over time, etc).   While maybe there is software out there (or hell, I bet I could get AI to write a webapp for me), I've thought about just tossing all the loans to a servicer to handle.

Other than just googling "loan servicing companies" and starting to dial the phone, are there any out there that anyone recommends? 
I assume some of the BRRR or multifamily people have run into this. Ideally they'd be located in Houston / Texas but maybe that doesn't matter.

(the other reason I'd like to use a servicing company is if someone is late, I don't want to deal with charging late fees, sending proper notices, etc.  I'd like to wash my hands of it once the loan is funded)

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New to Real Estate · Boston, MA · Member since 2019 · 6 posts · 2 votes
1y

Sounds like a good business plan!

I personally use Madison Management for the handful of notes I have. FCI is another pretty common/recommended servicer. Paperstac has a list of about 10 servicers they work with so you could use that list as a starting point rather than, as you say, just Googling (just go to Paperstac's "Knowledge Base" page and search "servicers" to get to the article). Texstar Escrow is also a company you could look into if you HAVE to have a servicer in TX, but other places will be able to service loans in TX.

Good luck!

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  • New to Real Estate · Boston, MA · Member since 2019 · 6 posts · 2 votes
    1y

    Sounds like a good business plan!

    I personally use Madison Management for the handful of notes I have. FCI is another pretty common/recommended servicer. Paperstac has a list of about 10 servicers they work with so you could use that list as a starting point rather than, as you say, just Googling (just go to Paperstac's "Knowledge Base" page and search "servicers" to get to the article). Texstar Escrow is also a company you could look into if you HAVE to have a servicer in TX, but other places will be able to service loans in TX.

    Good luck!

    • Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes
      1y
      Quote from @Joel Ward:

      Sounds like a good business plan!

      I personally use Madison Management for the handful of notes I have. FCI is another pretty common/recommended servicer. Paperstac has a list of about 10 servicers they work with so you could use that list as a starting point rather than, as you say, just Googling (just go to Paperstac's "Knowledge Base" page and search "servicers" to get to the article). Texstar Escrow is also a company you could look into if you HAVE to have a servicer in TX, but other places will be able to service loans in TX.

      Good luck!

      Thanks.  I reached out to Madison and FCI. 
    • Chris SeveneyBusiness Member
      Moderator
      Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
      1y
      Quote from @Cody L.:
      Quote from @Joel Ward:

      Sounds like a good business plan!

      I personally use Madison Management for the handful of notes I have. FCI is another pretty common/recommended servicer. Paperstac has a list of about 10 servicers they work with so you could use that list as a starting point rather than, as you say, just Googling (just go to Paperstac's "Knowledge Base" page and search "servicers" to get to the article). Texstar Escrow is also a company you could look into if you HAVE to have a servicer in TX, but other places will be able to service loans in TX.

      Good luck!

      Thanks.  I reached out to Madison and FCI. 

       I 2nd madison management. We have our portfolio with them and they are great to work with as of this writing.

      7e investments53 Reviews
  • Daniel TanasaBusiness Member
    Real Estate Broker · Houston, TX · Member since 2019 · 351 posts · 174 votes
    1y

    Hello Cody, 


    I only have one note that I service myself, but I heard good things about August REI from a friend of mine who has more than 50 notes with them and he's happy with their service.

    Good luck!

    • Daniel TanasaBusiness Member
      Real Estate Broker · Houston, TX · Member since 2019 · 351 posts · 174 votes
      1y
      Quote from @Daniel Tanasa:

      Hello Cody, 


      I only have one note that I service myself, but I heard good things about August REI from a friend of mine who has more than 50 notes with them and he's happy with their service.

      Good luck!


       They are based in Dallas, TX!

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