The best time to evaluate your investment strategy is..now.

[AJ Wong]

Well I've written about prohibitive financing costs and the list of qualified buyers without qualified deals is piling up. 

On non primary conventional loan purchases rates are in the 7-8-9-10%'s. 

Few buyers are willing to pay those proposed costs and few should. The numbers don't crunch. 

I'll tell you what does crunch lately..seller carry transactions or investing in private notes. 

There are plenty of good deals out there for the prudent buyer, but maybe it is time for an alternative investment consideration. 

If banks are charging A+++ borrowers A+++ interest on A+++ properties, why not play lender? 

Instead of looking for properties that post management and costs with a potential return 8-10% per annum, consider investing in a note at a guaranteed rate of 6-7-8% return and letting the owner deal with the joys of property ownership :)  

I know of several clients in the market for fair financing. A second home for an 800 credit score borrower with 25% down should not go from a 4 to a 10% risk in less time than a new iPhone model to drop. 

If it has, that suggests the banks and credit facilitators are discouraging lending due to an anticipated drop in asset valuations or a continuation or even prolonged elevation of borrowing costs. 

Banks clearly don't want to get stuck holding the paper. So maybe sellers and investors should? Even if the property is sold, seller's are faced with the undesirable position of where to safely and profitably store and invest the proceeds. All whilst purchasing power is diminishing by the moment, with Bank of America suggesting that historically, periods of inflation take a decade or so to complete their cycle... 

So assuming you or your client do secure that top dollar sale, by the time the money is reinvested it will buy considerably less, whether asset prices increase or not. Oh and by the way, the banks aren't paying depositors any higher rates of return, they're just charging it and as a result driving the value of all other hard earned assets down..

On the flip side, a private note to a qualified buyer with considerable investment and commitment is unlikely to default. Plus as the lender you can also provide meaningful and functional adjustments to terms when and if necessary, all while ensuring a stable and lucrative return on investment. Notes can also be increasingly sold efficiently prior to maturation if necessary. 

There are always risks and downsides, but for homeowners with a low investment base, they can often secure a greater net return on a property they're familiar with and buyers can often secure a property they otherwise would not have had been able to acquire, now often at a LOWER cost of borrowing, with a fraction of the noise. 

In Oregon in particular, third party escrow and title company administrators make the management and administration of the payments convenient and safe. 

As rates rise I anticipate a continued increase in the number of sellers willing to entertain creative financing solutions as well as what will become more commonly referred to as logical financing solutions. 

There is an opportunity by necessity to shift perspective from potential buyer, to investor or lender with lower risk, more efficient usages of capital and considerable strategic and investment advantages for all related parties.

If any individual or institutional investors with private lending or mortgage experience have suggestions on how to begin or grow a small boutique private lending organization, I'd imagine there are many Oregonian property owners and investors that are awaiting your expertise or example. Myself included. 

Thanks in advance BP! 

[Nate Sanow]

I really think seller financing type sellers are no different than any other lead source of property owners… in relationship, conversation, rapport building and trust, a regular seller can become someone who will help you get an owner finance deal. I’ve got a few I’ve been negotiating recently that I didn’t specifically target, sort of just happened. The phrase, “your price, my terms “ comes to mind.