Market for Owner Financed Mortgage Notes

2 Replies

Hi all. I’m researching the market for owner financed mortgage notes. I found some stats that broke down by state the number of notes created in 2017. What jumped out at me were the numbers in TX, FL, and CA relative to any other state. And TX dwarfed all others with over 17,000 in 2017. (CA and FL were about 9,000 each.) By comparison, 24 states created less than 1,000 each. (Sorry, I haven’t found more recent figures.) Assuming the relative scale of activity across states is the same in 2018 and 2019, I’m wondering why there are so many notes being created in these 3 states, especially TX? Is it simply a function of these being the 3 most populous states, or are there other local market factors that I’m not aware of?

These states are a function of the size and also the demographics of each of these states. CA, TX and FL have a larger segment of population that may not qualify for conventional bank financing for various reasons.

Thanks Chris. I’ve been learning more over the past several months and now I understand the various reasons you alluded to that drive the creation of mortgage take-backs. For example, property in rural locations or otherwise difficult to sell, low buyer credit rating or low cash for down payment, and seller’s ability and desire to earn a rate of return on equity.

I’m planning a direct mail campaign to broker notes and am considering where to to target. I’ve heard ppl say you can target any market, and I’ve heard ppl advise to start locally. The magnitude of the numbers in the states above is striking, but I’m now thinking that the more important decision relates to the actual marketing strategy and messaging itself. It might be best to start locally and focus on mastering effective marketing techniques insofar as they should work in any market if I choose to branch out later. Waddya think?