Investor · Clearwater, FL · Member since 2009 · 181 posts · 14 votes
I'm going to sell a condo down in Palm Desert California that I fully remodeled. I want to sell it with owner financing to facilitate a fast sale (lot of inventory in the desert and market time is VERY slow). Asking price will be around 300k (which is at or a bit above the FMV). Then I want to sell the note. Before doing so I'd like to know exactly what notebuyers are looking for so that I know how to structure the note.
This is what I'm considering: 20% down, carry the paper on 240k; 6% interest; principle/interest loan; 8 year term/amortized for 30 years with balloon payment at the end; 2 year prepayment penalty; will season note for 6 months.
Is this desireable? Acceptable? If not, please give me your feedback so that I can create the optimum note to facilitate a quick sale.
Also would a note like this be bought at par or is a discount expected? If discount expected what would be the approximate discount required?
Real Estate Broker · Northwest Indiana, IN · Member since 2011 · 2k+ posts · 2k+ votes
14y
We are buyers of performing, sub/re performing and non performing notes on a nationwide basis. Here is some insight from our wheel house.
It was only briefly mentioned and I want to put more of an emphasis. The collateral (real property) will be re-evaluated and a conservative value will be used. We and most of the pro's we work with use 30 day quick sale value from national BPO companies. No buyer is going to "push" the value up. The down payment on the loan is good and I would not lower it since this is a private loan.
The interest rate is pretty low for the loan being private. A common theme I see sometimes from REI folks is they think they have to compete with banks/lenders. Don't do it, your loan in its nature is riskier, you are not experienced at this and the borrower will be lesser grade more often then not. As I think Bill mentioned 9.0% is a nicer number, I would not go lower than 7.25%. You can write the loan with an interest only feature to it as well. A higher interest rate will reduce the new buyer discount in the event the borrower goes delinquent by missing a payment or two whether consecutive or in the life of your ownership.
Don't confuse yourself with a bank nor should you assume you should write a loan that looks conventional with its terms. Any borrower who can be approved for a conventional loan will just go get one. That should be fine with you, your paid in full and don't have to mess with a loan. This also provides an incentive for a borrower to look to refinance if rates persist over the next two or three years. As such, I would not put a pre-payment.
As far as credit goes. Everyone knows the better the credit the better. This also goes hand in hand with my point, a borrower with a higher credit score say 680+ should be talking to a bank/lender, not you. I would presume your borrower is more of a lower credit score. This could be "OK". We buy low FICOs all the time. Folks who recently came out of a foreclosure and need a new start or divorce or other life situations which given some time and rehabilitation should be able to get their score back up and go to a bank/lender. I would try to keep the minimum to 600+ but you never know if someone comes in and wants to put more money down or some other compensating factor. Be prepared to weigh all of the parameters.
The balloon is a tool that you need to use as safety net. I would set the balloon somewhere in the ballpark of 24 to 36 months. I think this ties back in with the borrower profile you will end up with. Help push them to get you refinanced out. This will also help keep some value in the loan if you sell later in the loan life. Some buyers will buy this for the chance of default by maturity and it should help you reduce the discount on UPB if he is performing. In example, if he is paying and you sell with 12 months left a 5.0% UPB discount on a 7.25% interest going to put a little less then 12.0% IRR on the table for an investor/buyer if he refinances out. The maturity time will attract some folks to jump in and see if he goes into default and take a gain on the foreclosure.
Regarding pricing. In general being a private loan you will most likely never see anything close to par or 100% of UPB. 6 months is probably close to 82% to 85% of UPB, 12 months plus you should be able to find 85% to 92% of UPB. (UPB = Unpaid Principal Balance) In the event he goes delinquent one or two times you can discount those numbers by an additional 5% to 10%. If he has more delinquencies or ends up in default you can expect to see a much deeper discounts. The good news is California non-performing bids tend to still be on the higher side of the rest of the nation because of the non-judicial foreclosure practice.
None of that is an offer to buy your loan or is meant to be any formal offer. It is meant to give you general market insight. As Bill mentioned, get some experienced folks on your side to help originate and not a bad idea to continue to find note investors to bounce the loan terms and structure off of as you move forward.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
14y
Alfred, Dion has made some good comments above.
To add, your condo project will need to have about 75 to 80% of the project sold and usually over half need to be owner occupied, this may be a little off now, but basically that's about what the project will need to meet. If your project is not near these ratios you'll have a hard time getting conventional financing, imo.
Yes, your unit needs to be completed if it is not. You have a real hill to climb if you expecct a buyer to finish it off, you could finish to the buyer's requirements, finish it and then close. Yes, you need to have an appraisal to help in your loan package to get the highest price.
I was going to mention too about a balloon payment, say out to 5/7/10 years. Very few private investors will want a fully amortized note. OTH, not many individuals buy 200+K seller financed notes, so you may only be looking at institutional buyers for that note anyway.
As to RE agents, if a buyer comes with an agent, the agent must obtain an authorization to show before showing your property and in that there will be the terms for commissions due on that property.
Investor · Clearwater, FL · Member since 2009 · 181 posts · 14 votes
14y
Dion: Thanks for the data and opinions. Don't know where you got that condo isn't finished. It was totally remodeled, is beautiful, vacant and ready for move in.
Investor · Clearwater, FL · Member since 2009 · 181 posts · 14 votes
14y
I'm calling local lenders now for data. Lots of disconnected numbers (guess a lot of small lenders have gone out of biz).
Marc: Here is what I've got so far. The Franklin guy had fast answers and was very certain.
Mission Hills Mortgage:
Must have the HOA Certification. Today condos are super duper complex and there is a lot of data that must be known to work out a loan (how many units, how many are owner/occupied, how many are rentals, how many are second homes, is HOA off or on site, et. Etc. Can do conven or FHA loan. FHA little easier 3.5% down (.5% DP if qualify for First Time Homeowner Pgm). If the condo is already FHA approved it makes it easier. 51% must be owner occupied. If less than 640+ FICO borrower would need a bigger DP.
Franklin Loan Center:
Preferred lender for 3 of the big 4 realty companies (Windemere, Keller Williams and HK Lane). This guy is the high producer of Franklin and seems to be on top of things. He told me that my condo complex is not FHA approved so an FHA loan won't happen. Borrower is going to need 20% DP (a 10% is slightly possible if for a primary residence, but most mortgage companies are not hot on 10% DP on Calif condos now so would be very difficult and not too realistic). Borrower can get a 5, 10, 20, 30 year adjust or fixed, whatever they want as long as they can put 20% down. We're back to 1980 lending guidelines. For a condo like mine selling for 290k borrower would need a minimum of 40k annual income to qualify, and a higher income if they have debt (car loans, credit card loans, etc.). Need 2 years of tax returns, 2 years of bank statements, they must have INCOME (being a millionaire with high net worth and assets doesn't matter), if self-employed will have a very hard time getting a loan. There is also a condo approval process needed (checking the CCRs for any problems, etc.) Great time to buy if you can qualify cuz rates are the lowest they've ever been (3.875% for 30 yr fixed, 3.125% for 15 yr fixed) and will probably go lower. Don't be impressed by a buyer with a BofA letter of approval… BofA is taking over 90 days to close loans and their preapp means zero. Your buyer could fall out of escrow.
Investor · Kalamazoo, MI · Member since 2009 · 1k+ posts · 495 votes
14y
Is your complex FHA approved? How many of the units are currently sold and how many are for sale? Does your condo complex have any of the issues mentioned? A note buyer (a smart one anyhow) is going to be concerned about the same issues as the bank.
Does your unit have HOA certification? "how many units, how many are owner/occupied, how many are rentals, how many are second homes, is HOA off or on site?" Do you have the HOA Condo report? If there are a bunch of issues here, it could make it hard to sell a note secured by one of these units.
With that said, as you can see from the banks attitude, Cash Down (skin in the game/equity) will mitigate a lot of these issues. Heck CASH can mitigate all of these issues-IF you can just find yourself a CASH buyer!!!!
Do not oversell the property. Sell at or slightly under market value. It feels to me like you are going to need to use price, as well as terms, in order to get this unit sold. Also remember that you are competing with market rents.
What can I rent an identical unit for? If you were going to put your unit on the rental market-what would you ask for rent? You are going to have to figure out how to make your payments competitive or better than market rents in order to make this unit attractive.
How much money do you have into the unit at this stage of the game? What is the real market (ask Realtors/get comps) value?
With the answers to these questions, I can suggest a plan of attack and several structures that will provide you and your money guy with a safe, secure and marketable note.
Some keys:
1. Sell at a fair price. As an investor, I do not want to get involved in a situation where some poor schmuck was laid away on the sale price, just because he was not capable of going out and getting a bank loan.
2. Sell to a borrower that has a strong down payment. A borrower that has invested a lot into something is a lot less likely to up and walk away, when the sh*% hits the fan. This is the same reasoning that makes me suggest that you only sell to a buyer that plans on occupying the property. If this is their HOME, they will fight to keep it. If your borrower has nothing to fight for, then an investor will not have much reason to fight for your note in the secondary market when it comes time for them to bid on it.
*3. Set up the deal so that it is a true "win-win" for all parties involved. Don't take short cuts and don't take advantage of folks. Hey this is good advice for all transactions in life ah???
#3 is where most folks seem to get stuck. This gets into underwriting, due diligence, note structure, doc prep, closing and servicing. #3 is where 99% of the banks got stuck and perhaps the biggest problems in our country at the moment-GREED and FEAR.... Transactions that are created out of greed or fear are never set up as a win-win and, thus are destined to fail from the start. Use common sense underwriting. The banks above have given you their guidelines: Income, down payment, job time, minimum credit rating, etc.
A) You want to set up the payment plan so that your borrower can afford to make the payments and, see the light at the end of the tunnel-leading to the American dream of home ownership.
B) You want to set up the note documentation to the letter of the law. You want to make sure you provide your buyer with all of the required disclosures. You will want to use a qualified third party to close, record and service your transaction.
Again-I will lay this out for you to the best of my ability.
1. I want to know how much you could rent this unit for?
2. At what payment amount would you have multiple renters competing for the place?
3. What do you feel is the conservative market value?
4. How much does your investor have into this unit total?
Investor · Kalamazoo, MI · Member since 2009 · 1k+ posts · 495 votes
14y
Alfred Bell -Please do not worry yourself about all of the questions regarding the state of the HOA, sales and ownership ratios of the condo unit at the moment. YES-I want to know the answers to these questions but, I am not worried about those at the moment.
1. I want a REAL FMV.
2. I want a REAL Fair Market Rent. I would also like to know what the demand for rentals are in the area.
3. I want to know how much you guys are into this project for.
With the answers to these questions-I can certainly offer you some suggestions on ways you, and your money man, can come out of this without losing your butts assuming you are not totally buried in the place.
Investor · Clearwater, FL · Member since 2009 · 181 posts · 14 votes
14y
Marc:
I've got some things I need to take care of this morning, but here are some quick answers to your questions...
The complex is not FHA approved. There is a chance of a Freddie or Fannie loan, especially if there is a high DP. All the lenders said that a buyer for this condo would most likely have to go conventional.
I checked with HOA yesterday on this. There is no HOA certificate. They don't issue them. They just fill out a questionnaire form that a lender sends them for all of that info and they charge $100-150 for doing it.
I can't answer most of these questions as this data has to be current and come from the HOA (how many owner/occupied? how many second homes? how many rentals? how many for sale? etc.).
I can tell you that there are 44 units (8 of them are larger units with a front and back entrance, I have one of the 8). And the HOA is off-site. This condo, and some are, is NOT on indian land (in which you don't own the dirt but lease it). Per last HOA report there is no litigation, debt or trouble. Normally, condos rarely come available in this complex (especially the 8 larger ones) but I've been told that there are a few of the smaller condos up for sale now.
This is not a non-warranted condo. It could be sold through a lender. They would just have to go through the normal due diligence that they do on condos to ensure it isn't a non-warranted condo (law suits, debt, foreclosure, indian land, etc.)
We have about 270k into this project (200k purchase, 70k remodel and holding costs).
A very experienced realtor friend who lives in the complex said that I could probably rent it for $1400/month (and apparently rents are going up). Not sure of the rental demand at this time (I've had about 5 people call me that were interested in leasing a place but of course I told them the condo was for sale only).
The last BPO I received on the property was general, stating a range of 240-280k, and stating that being brand new and remodeled and in a great location would most likely put me at the top of that range.
We started out asking 350k and then made price reductions over the last 5 months. 339.5K, 329.5k, 319.5k, 299.5k and now we have it at "290k, Owner Financing Considered".
Now that I see how complicated owner financing is and that I'd have to use a licensed originator, etc. I don't really see this as being "a desireable, no bank qualifying situation" for a buyer. It appears they'd have to jump through the same hoops with me that they would with a bank. Don't see much of a difference other than I'd be the bank now.
Yes, I agree... an all cash buyer without realtor representation is the ideal scene.
Investor · Kalamazoo, MI · Member since 2009 · 1k+ posts · 495 votes
14y
I may have misspoke when I said, I can help you from losing your AS#. Also- I was kidding on the all cash buyer! That is not the way you are going to be able to recoup any of your investment. Also-you have to much into this, compared to the actual value, to think of this as a quick flip project. There is just no margin there for that.
So-for the sake of argument, let's say the place is worth the $280,000. Let's also assume you can find a buyer that has no problem with that price as long as you can make the terms affordable. You want to cast your net far and wide. The idea of seller financing is to make it easy for folks to qualify for your unit, not to make it harder. This is why I say you NEED to be "flexible" on your end. IF they could qualify for bank financing, they don't need you or your deal. This is also why I say that if you find a buyer that has a Realtor and, a bunch of demands, that this is not the buyer for you.
The problem here, as I see it now, is that you just have to much into this deal. If you sell it for $280,000, there is just no good way to structure the, that would make the purchase competitive with market rents:
80% of $280,000 is $224,000. $224,000 financed at 7.5% for 360 months is: $1,566.24 a month, PLUS taxes, insurance, HOA Fees, maintenance, etc. I would not suggest using a rate any lower than 7.5%. I would not suggest setting up the note any other way than fully amortizing, at any longer than a 30 yr. term, with any less than a 5 yr. balloon.
I hate to say this but, I do not see seller financing (in terms of creating a deed of trust and note) as a viable solution for your problem. It is just to tough to set it up in a ay that is competitive with market rents. Others may disagree and I welcome their solutions. Seller financing can solve all of the problems regarding the buyer or the property qualifying for conventional financing but, it can not solve paying to much for an investment property-sorry-you would just be passing your bad deal onto a bigger fool. There is no win-win and hence there is no deal in my mind.
Real Estate Broker · Northwest Indiana, IN · Member since 2011 · 2k+ posts · 2k+ votes
14y
Alfred Bell the rent amount at $1400 seems low for a large 2 bedroom condo. What is your HOA dues monthly or annually? Also what are your annual taxes?
You really need to be looking at renting this thing and stop thinking about selling with or without finance. I would be curious to know what price per square foot the smaller units that are listed are listed for as well as how many square feet your unit is.
If you can start pulling rent in you have a chance to pay some money back to your investor before incurring a loss. That said you are going to have to sit down with him and explain this all. You unit is worth $280k and you have $270k into it. If you sell, you will not recover your funds simply by a function of closing costs. Even with seller financing you will have closing costs because you are still selling the property. This is also contingent on someone offering $280k and not something in the $270's.
For the sake of example, if your HOA fees and taxes are $400 (I assume they are higher than this but the example works) per month you have $1,000 to work with. I would see if the investor is willing to take the $1,000 a month and reduce his principal. Just be honest with him, he needs to do this with no return on his money for the moment. Get the exact cost for you to sell your property from a local title company or attorney. I would also include a cost of a real estate agent and stop jerking around with this thing. Once you have all of your costs you can create your target exit date. Probably 36 months out. Get out break even and move on.
The tricky part is you are going to have to out run or see if it is plausible to out run further decline in your value. The good news is your complex is only 44 units so the low volume of sales might help stay some of the value fade. Those smaller units that are for sale could possibly start dragging your value down. You will have to evaluate this if you are up against a large drop in value coming it may be time to cut all losses and just list the property at $280k with an agent and get out before you loose any more money. That is the problem with condos, any type of fire sale effects the entire building and you could loose 5% over night. BTW, you are only a little above 3.0% in gross margin right now.
All this seller finance stuff is good and great and everyone has tried to help you but IMO, this is all pretty new to you. IMO, it would in an injustice to you to send you and your investor into something that frankly you don't understand which could cost you even more money. Stick with the simple. You are in a loosing trade, you need to start making moves to hedge your losses my friend. Don't try new things, stick with what you know and your investor knows to help keep everyone playing well together.
Investor · Clearwater, FL · Member since 2009 · 181 posts · 14 votes
14y
Marc:
I hear you. Thanks for the input.
I think I might have a breakthrough or solution for all of this. Working on it right now. Conferring with my money partner. Just waiting for his answers (he can be slow on email and returning calls). I'll get back to you shortly.
Investor · Clearwater, FL · Member since 2009 · 181 posts · 14 votes
14y
I sent my bright idea to my money partner and I'm waiting to hear back as to whether he is willing to go along with it or not.
Here is my idea... I believe that if my money partner is willing to HOLD the note for an extended period (or until maturity) it will completely change the dynamics of this situation and allow for the owner carry strategy to be workable and for it to end in a win/win.
Converting this condo into a "portfolio note" winds my money partner up with a safe, high yielding, long term investment. And gets him out of property ownership = frees him from the holding costs, the exposure to liability of property ownership, and the strong possibility of owning a depreciating asset (I don't believe prices have hit bottom yet in this area yet).
This strategy would allow us to sell the condo at a lower price, since my money partner will be able to recoup his losses via the interest on the note (and the first 5+ years of a 30 year amortized note is almost pure interest). He doesn't have to sell the note until the combination of interest received and and what a note investor is willing to pay for note allows him to recoup his initial capital, or make a small profit. But to make this work we would have to have a prepayment penalty on the loan.
I worked out a rough scenario just to get an idea of numbers and time. Let's say we structured a note for 7.25%; 8 year term (amortized for 30 years); 20% DP; balloon payment due at end of term. Let's say we sell condo for 260k.
ROUGH CALCULATION EXAMPLE:
20% down payment = $52,000. We would finance the balance of $208,000 @ 7.25%. The principal and interest payment on this loan would be $1,418.93 per month = $17,027.16 per annum.
(Note that the P/I payment is equal to what this unit would currently rent for.)
1st year income: $52,000 DP + $17,027.16 payments = $69,027.16
2nd year cumulative income: $86,054.32
3rd year cumulative income: $103,081.48
4th year cumulative income: $120,108.64
5th year cumulative income: $137,135.80
6th year cumulative income: $154,162.96
7th year cumulative income: $171,190.12
8th year cumulative income: $188,217.28
(Note: the above are rough numbers because taxes and inflation aren't being figured into the equation. Also a Realtor commission isn't included if a Realtor became involved in the sale... which we would try and avoid. And transactional costs of escrow and the cost of paying a licensed mortgage originator to create the note isn't included. And the cost of a loan servicer isn't included... but that will be the borrower's cost anyway.)
(If money partner managed to hold note until maturity, the balloon payment due after 8 years would be $186,973.13... $188,217.28 + $186,973.13 = $375,190.41 total cumulative income... $375,190.41 MINUS $280,000 (initial investment) = $95,190.41 profit.)
My money partner is into this condo for approx 280k.
If the buyer/borrower refinanced after two years into the loan term, my money partner would've received $86,000 in DP and P/I payments, and would then receive $203,822 from the refinance, putting him at $289,876... almost 10k over his initial investment which would technically be a break even. (So we'd need a 2 year prepayment penalty on the note.)
If the buyer/borrower doesn't refinance after 2 years then my money partner moves into a profit phase. He could also sell the note after 4 or 5 years at a decent discount and recoup his money as well.
Obviously there is more to this but this post is getting too long so I'll end here. I have some other thoughts which I will post shortly.
Thanks for listening/reading.
Investor · Clearwater, FL · Member since 2009 · 181 posts · 14 votes
14y
Creating this note for my money partner is a bit easier than having to do it for institutional investors that we would want to sell it to after a year (who are going to want high discounts).
The plus points of this strategy are: We can sell at a lower price which will allow us to finally facilitate a sale; my partner will be free from holding costs, property liability and depreciation; my partner has a 7.25% secured note in his portfolio (he'll be happy, since his money was earlier sitting in 13 week treasuries at .25%); not taking advantage of a buyer/borrower (he gets a fair price, we ensure he can make the payments, etc. = win/win) so we can't be hit for predatory lending.
The ideal buyer would be... institutional financing just won't work for him/her but he/she is in a financial condition and has the wherewithal to make the payments; he/she has the DP (or can get it somewhere); his/her debt to income ratio allows him/her to take on the mortgage; he/she has a solid workable program to repair their FICO or whatever may be going on; he/she isn't represented by a Realtor; he/she loves the condo and location and really wants the American Dream of ownership.
My only real challenge would be to create the marketing campaign that will be able to successfully find this buyer/borrower in the off season.
If my only choice is a buyer/borrower represented by a Realtor... then we'll have to take the hit for the 3% commission and readjust our projections for break even/profit (altho 3% of 260k is only $7,800).
Investor · Kalamazoo, MI · Member since 2009 · 1k+ posts · 495 votes
14y
"What do you want Mr. Notebuyer?" I like some of your thoughts that I briefly skimmed above Alfred Bell but, what I want as a note buyer for the rest of the weekend is to relax with my wife, drink a few beers on the lake and, to forget about the world for just a couple of days. I am going to do my darndest to stay off of the computer and, not do any work until Tuesday rolls around. I will take a better look at your ideas when I get back to reality on Tuesday!
Real Estate Broker · Northwest Indiana, IN · Member since 2011 · 2k+ posts · 2k+ votes
14y
Alfred Bell, its a plan that is for sure. One correction to the above though is the cost of servicing is net of the payments collected from the borrower not on top. So if your borrower's monthly payment is $100 the servicing fees of $25 will be deducted from that payment and remitted to you thus you net $75. Servicing is not on top of the $100 making the borrower's payment $125.
Investor · Kalamazoo, MI · Member since 2009 · 1k+ posts · 495 votes
14y
Dion DePaoli - I like to pass the servicing fee on to the borrower, when I can get away with it! SELL the servicing as an additional benefit to the borrower.
Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
14y
Servicing fees can be added and paid by a borrower, but if you do it will be a loan expense required and computed in the payment for the APR for any usury issues, if any. The borrower can be seen as paying it anyway, if the holder pays it it's off the interest collected, so either way.
Investor · Clearwater, FL · Member since 2009 · 181 posts · 14 votes
14y
Might just wind up paying for the service company ourselves and consider it a cost of doing business. If I can get the buyer/borrower to pay for it I will, but not if it will create an upset.
Investor · Kalamazoo, MI · Member since 2009 · 1k+ posts · 495 votes
14y
Alfred-Thanks for the day off!! Like I said before, you are going to need to be reasonable and negotiable, if you are ever going to sell this property. Borrowers with the full 20% down will most likely have a lot of options. Think outside of the box, unlike the the banks will do right now. I would not rule out a trade, if your potential borrower does not have all cash. Maybe it is something of value to you or something that you can easily turn into cash.
The real point is that you need to find someone that has some skin in the game in a form that is acceptable and, useful to you and the deal. Banks won't take trades-you can! You could possibly also get a security interest in other property they have as part of the collateral. This would give the note and your investor additional security. This feels like "skin" to me, if set up the right way. If your only choice is to work with a Realtor and pay a commission then no big deal, it is just part of the cost of doing business. If the buyer refuses to pay for the servicing but, has other qualities you like, then you may still want to deal with them as you stated above.
When you are in control of financing your own sale, you have the power to be more flexible than the banks and, this should make your property stand out above the rest of the competition, assuming you can offer a good deal compared to renting or the other choices out there. If you can't figure out how to do that, you are sunk before you even get started. I think you know enough about getting the deal structured, to get that part of the job done, IF you can only find a buyer. How can you structure the numbers and market the property to make it more appealing than the other options I would have in the same area?
Investor · Clearwater, FL · Member since 2009 · 181 posts · 14 votes
14y
Thanks for that Marc. Also, I'm just wondering...
Does anyone see any flaws, unrealities or unworkability in the new, hopeful strategy I posted at (DATE) to create a note and have my money partner hold it for the time period necessary to recoup his loss from the sale via the interest payments he will receive (and then either sell note or continue to hold it longer for further profit)?
Investor · Clearwater, FL · Member since 2009 · 181 posts · 14 votes
14y
Oops! Forgot to fill in the date of the post I was referring to in my last post. It was May 27 10:46am post. As I said earlier, I'd appreciate any feedback on this strategy. Thanks.
Investor · Kalamazoo, MI · Member since 2009 · 1k+ posts · 495 votes
14y
Any competent escrow company, title company or real estate attorney in CA, if they know anything, should be able to help with the paperwork, closing and filings. My research indicates that you can seller finance up to 5 properties in Ca. without a problem. What other specific questions did you have?
Investor · Clearwater, FL · Member since 2009 · 181 posts · 14 votes
14y
Marc: You sort of just answered it, but... I'd still like your feedback on this as it seems to be the most iffy part of this plan...
Confusion: My original understanding was that the purpose of having the loan originated by a licensed loan broker was to ensure that it was in compliance with Calif law and valid, so that it would be a credible note, able to be sold at a later date on the secondary market. But now I understand that the originator would cause for there to be a loan app, appraisal, credit history, job/income data, debt ratio, etc. And, if the originator isn't satisfied with the requirements then he/she won't originate the loan and will kill the deal. Also, this seems to be a major contradiction to my offering "owner financing, no bank qualifying" because using an originator is tantamount to the same thing. (Would I actually be better off doing this myself, generating my own loan file and just having the note and TD done by a competent escrow company on doc forms from a title company that are Calif legal?) Please clarify or explain? Thanks.