All Forum Posts by: Marco Bario

@Charley Gates -

I think it's notable that there were more that 86K seller financed originations in 2021 compared to 84K in 2020. We were in the midsts of record low interest rates and very low inventory. One might think sellers would want nothing to do with seller financing, but for some reason it ticked upwards. (source: https://noteinvestor.com/notes...)

Due to risking rates, I suspect we'll see a further increase when the 2022 numbers are shared. 

As for 2023 - I can tell you I'm receiving a far higher quantity of inquiries from sellers holding newly originated notes. This began just after the new year. Many are reluctant seller financiers who would rather have have a pile of cash than monthly payments. 

12+ months is ideal. That said, some notes aren't so pretty but still have a great personality ;)

I also look at borrower credit, collateral, and the amount of the downpayment. Looking good in one or more of these categories can offset the risk of minimal seasoning.

Many seller financed note balances are in the $75K - $250K range. Depending on the collateral, guarantee, etc - we will purchase balances up to about $1M. 

@Joseph Cacciapaglia, @Maaz Husain - 

Most everyone buys Texas paper because it's an easy state to own notes in and the easiest to foreclose in should the payor default. You don't necessarily need a buyer located in Texas.

Investors buying real estate "subject to" take title to real property subject to an existing mortgage. Following the closing, the investor makes payments as they come due to the mortgage servicer.

Note investors buy debt secured by real estate. Any payments made are due to and received by the note investor. 

@Drew Sygit - Why do you specifically call out the Gramm-Leach-Bliley Act? Dodd-Frank is the most relevant at the federal level, and owners who carry back only once in 12 months are mostly exempt.

@Beatriz Casarez - Everything you said sounds good, except seller financed interest rates should be higher than bank rates. Banks lend other peoples money, can sell debt at par, and tend to receive bailouts when things go really bad. 

As an individual financing equity you own, your risk profile is higher and the rate should reflect that.

@Jacob Heckford

"Creative Financing" is a broad area. Maybe tell us more about your deal, the seller's needs, and which tools you're considering.

@Ray Mungia

There are ways to invest in real estate using your retirement account which don't involve holding title to real property. 

I use a Solo 401K which is similar to a Self Directed IRA to invest as a limited partner in syndications, to buy options on real estate, and buy notes secured by real estate.

The Solo K is a trust with its own checking account that I control. That trust holds my syndicated investments. The trust also owns an LLC. That LLC holds notes and options.

I haven't wanted to hold title to real property in my retirement account because of lawsuit risks, and the inability to claim depreciation. 

@Kiley Boss

You can partner with experienced investors. 

Example:

You find a deal (fix & flip, property wholesale, buy & hold, note, etc) and bring it to the experienced investor. They bring the cash and experience, but you keep a piece for yourself. That could look like a percentage of ownership, an option, a percentage of cashflow… there are lots of pieces in real estate which can be shared.

My other piece of advice is to attend real estate investor meetups. These days some very good ones are online, and many are back in person. You'll meet future partners and you'll learn what others are doing.