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Updated about 5 hours ago on .

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3,794
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Cody L.
  • Rental Property Investor
  • San Diego, Ca
4,458
Votes |
3,794
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Loan servicing for seller financed notes

Cody L.
  • Rental Property Investor
  • San Diego, Ca
Posted

As a buyer, I love seller financing because I can close quick/easy. Then, once I own the property I can take my time to work with a lender to get it refinanced. A bonus is the lender will normally (re)finance based on the appraisal, vs. your purchase price. This has resulted in a lot of 80, 90, or even higher % LTV

I also like it as a seller since I can sell to someone without having to deal with all the time and work involved when a buyer is using a bank.   Then the buyer can take their time and refinance at their own speed.  If it takes them 30 days, 60 days, 90, 120, etc. it's no problem as they already have and are operating the property.  

But now the question:  I've seller financed a lot of deals.   I hold quite a few notes.  I'm not worried about their performance since I only loan on properties I'd be happy to own at the amount the loan was done for (and typically I'm loaning properties I sold so worst case, I get it back and my cost basis is lowered by their down payment).  However, since this isn't my core business, managing them sort of sucks.  I don't have software to do this (beyond using my property management software to allow them to make payments, and a spreadsheet to manage loan start/end dates, any changes to rate based on bumps over time, etc).   While maybe there is software out there (or hell, I bet I could get AI to write a webapp for me), I've thought about just tossing all the loans to a servicer to handle.

Other than just googling "loan servicing companies" and starting to dial the phone, are there any out there that anyone recommends? 
I assume some of the BRRR or multifamily people have run into this. Ideally they'd be located in Houston / Texas but maybe that doesn't matter.

(the other reason I'd like to use a servicing company is if someone is late, I don't want to deal with charging late fees, sending proper notices, etc.  I'd like to wash my hands of it once the loan is funded)