The Staged Funding Solution - Getting The Most Out of Your Real Estate Note...

There may be many different needs that any one person might have for money at any given time. If you are thinking about selling a mortgage note to satisfy your need then you must find the proper approach that will work for your situation.

The example we will discuss in this post will help those of you who may have a small need for money over time or a large need that cannot be provided from a full sell of the note. The needs may be college tuition, yearly taxes for private business, or any other such financial issue.

Here is an actual case study of how this can work for you:

Bob had a new real estate mortgage note, which was the result of the sale of his previous home. The note was $47,000.00 on a 15 year term with 4% interest and a payment of $347.65 per month.

How we solved Bob's problem...

Now Bob's problem is that any investor looking for a note to purchase is not going to give a large sum for this one because the interest rate is too low for a descent return and, of course, Bob was offended by the quote of only the $31,512.00 that we would be able to pay for a full purchase of this note.

So, Bob is still stuck with the money problem and looking at student loans that will have to be paid back over many years of payments at 6% or more interest.

But what we were able to show Bob is that there is still a solution that we were willing to consider... this solution is typically called "Staged Funding".

Bob needed $3,800.00 per year for the next four years to pay for his tuition. So we offered him $3,800.00 which would cover his first year of tuition, and in return we would receive the next 20 payments of the loan.

At the start of the next school year we would give him another $3,800.00 in return for payments 21 to 40, and the next two years were repeated in a similar fashion.

At the end of 80 payments (just shy of 7 years) it was time for Bob to get his note back and start receiving payments again.

He had received $15,200.00 over the 4 years of school and now the note is returned with a balance of $37,076.41, which is how much the payors would have to pay if they were to pay it off at that time.

Bob's total potential return is $52,276.41! Not a bad return in 7 years for a note that was originally only $47,000!

Call us today and let us provide a solution for you!