We have a home for sale and are considering selling with owner financing, with the intention of selling the note later. Maybe even part of the note. We are looking for some one who can help us structure the mortgage so the note is marketable.
As it stands the deal is $125,000. $30,000 down with payments of $708/ mo. for 240 months at 6%. We are still in the negotiating process though so we can change a few things. Also if anyone wants to see the house it is listed on Trulia and Zillow and C-list.
Just search for 81 Wannamaker Dr Barnwell SC 29812
I believe, http://www.fciexchange.com/ can provide this service for you and also service the note
Part of the equation is why do you want to seller finance while anticipating selling the note instead of waiting for a qualified buyer. If the property or market has problems that require seller financing, the investor will require a healthy discounted yield to compensate for the extra risk. If the market will not support the $125,000 sale price or the down payment was made outside of escrow, you will have a much larger discount and lose potential note buyers.
If you can't use the cash right now and prefer earning interest or want to defer capital gains taxes, meaning there are not any real issues with the property or market conditions, you might get an investor to discount the note only to yield 8 - 10%. A 25% down payment is strong, you will want to review the buyer's credit to make certain they have good credit.
You will also need to check to see if you need an RMLO to create a compliant loan. Developers are required regardless of the number of notes they create. The rules regarding flippers and rehabbers have not been interpreted yet to be definitive as far as I know.
Thanks for the replies. The market here is a little depressed but we have lots of offers for owner financing. We just need to be cashed out for other investment opportunities. I also failed to mention in my last post that the property is priced well below market. I am not sure if a high equity will raise the value of a note. This home is at $125000 about 50k under market. I do realize that qualifying the buyer is a must.
Actually this may not be an issue after all because last night we had a couple come by to see the house and gave us a full price offer on the spot. Escrow opens Monday...
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@Dave Bruton iunvestor that buy notes buy for yield ... equity is good and they want that but regardless of equity your going to discount to yield.. and on a 6% 20 year note I suspect you will take a 15 to 20% discount to sell it to an investor.. more if a broker is involved
run it through your PVM ( present value of money) calculator and calculate a 12 to 15% return for the note buyer that will give you an idea of market value
Congratulations on thinking outside the box. I have sold many properties using Seller financing. As you put the Note together, keep in mind that every month of "on time" payments strengthens the value of the Note. I have found it best to season the Note for about a year then sell. The interest that I collect while hold the paper helps offset the discount.
Another thing to keep in mind is that the Note Seller could sell a "partial" (example: the next 60 payments). This will permit the seller to keep the back end of the loan and the interest.
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