How to use an option agreement to get a note ....

Question

.... under contract & assign it?

Is there anyone that teaches this process? Or is there recommended literature that's specific to it?

Thanks in advance.

Kevin Moen · Answer

@Sue Bishop The first place most credible note buyers start is by verifying the broker contacting them with a note is either the owner of that note, or in direct control of selling that note. Daisy chains and joker brokers are quickly sniffed out, and you will not make it in the note business looking to assign a note. The inventory is much more plentiful that real estate and finding and reviewing notes is not nearly as hard as great distressed property. That is why wholesalers exist in real estate, but are far and few between in the note industry.

A better business model would be to find a solid performing note, find an investor interested in buying a partial, and closing both simultaneously for minimum out of pocket (assuming that is your goal behind assigning).

Scott Carson · Answer

Flipping notes is called wholesaling.  It happens all the time.  We buy notes for our own portfolio each and every month and we assign/sell off others that our students are purchasing with a wholesale/option fee attached to it for our profits.  We also use options when one of our students is using their SD IRA's to fund/flip deals.

Don Konipol · Answer

In order to be successful in "flipping" notes, one has to be a better judge of market value for notes than the buyer and seller, or find a seller who is not aware of the on line marketplace note exchanges.  While certainly possible, the number of people trying to "flip" or broker notes seems to be increasing as the number of notes available from "unaware" note holders seems to be declining.  One of those business opportunities that seems so good to the general public, but in reality a small number have success.

Wayne Brooks · Answer

Not likely to happen.  Sellers of notes aren't going to play those games.  Plus, you're assuming you can find a note, then find a "greater fool" somewhere.

Scott Carson · Answer

Sue,

Every contract is assignable.  You don't need a separate opti

Sue Bishop · Answer

@Scott CarsonI/we specifically want to learn how to get a seller's note under contract & assign it to a cash buyer. Is that something you teach via written material or one on one? Thanks.

Scott Carson · Answer

Yes and no.  Usually the hedge funds don't care who the assignments are made out to as long as they've gotten their cash.  We don't usually do this with direct bank relationships.  The hedge funds that we do this with know that we'll close on the deal if our buyers walk.  We do a lot of due diligence and proofing the buyers, especially if they haven't bought with us before.

Sue Bishop · Answer

@Scott CarsonGreat!

Do you also assign them to an end buyer without having to buy them?

Sue Bishop · Answer

If both the seller & the end buyer are content with the transaction? Why would they be a fool?

How to use an option agreement to get a note ....

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