Selling a Balloon Payment.

[Aaron Caddel]

I'm working on some seminar prep with @Jason Dillard. His presentation is centered around the idea of growing your transaction creativity/profitability through the mastery of paper. For REIs involved in development projects, practicing exchanges or just even creative finance strategies with buyers/seller, my question is: how much are you focusing on the power of debt in addition to the power of equity?

Here's some thought provoking points:

• The BORROWER can create cashflow for themselves through an exchange on their loan.
• Any defined number of payments can be sold. 
• A Balloon payment can also be sold.
• A sold balloon payment can be used to alter an interest rate, to generate cash, or even create equity.
• Mortgages can be moved and, obviously, sold.
• Paper can hide profit inside the financing
• Paper can raise cash for other deals
• Can make the purchase price of a property nearly irrelevant.

Two questions: (1) what are other ways YOU are using paper in your real estate investments and (2) how interesting is this subject matter for the average seminar-goer?

[Don Konipol]

@Aaron Caddel

"Exchanging" which is lubricated by the "creative financing" and "paper" situations you describe was very big when interest rates of 17% "killed" the real estate market 40 years ago. Now, with rates so low there is much less need; however, the demand still exists when either the property or the borrower does not qualify for conventional or institutional financing. Although I find opportunities that meet my minimum ROI and maximum risk much harder to find, I still participate when the opportunities arise.