All Forum Posts by: Chris Eidson

@Logan Hassinger

These are notes being sold back from a wholesaler of low end flips.  He was basically owner financing them as a creative solution for funding the construction on distressed properties.  I do agree though that I should ask whether I want to own the property.  However, I am approaching these as a passive income more than anything else right now.

Just for curiosity, does this sound like a fair deal?:

Note on a property that is currently worth $37K with potential after renovation of being $75K.  Balance of note is $21,900.  I can buy at a 5% discount on 12% and receive payments of 1025.91 for 22 months

@Chris Seveney

Thanks so much. Conservatively, the note is at 50% LTV. It's a house that is a low end flip. My biggest concern is default due to non payment of taxes or the hazard insurance lapsing and having a loss. On the issue of hazard insurance, how can you be sure that the servicing company will catch it and force coverage?

@Logan Hassinger@Tim Holmes

I am just getting started in this and will be starting small. I am looking at performing notes from a wholesaler of SFH who did owner financing to flippers. Most of them are 8-12% with about a 5% discount. I have copies of note and mortgage and payment histories from the servicing company and I am able to look up tax delinquencies (as they don't escrow). I would love to be able to get a credit report on the borrower to feel good about jumping in. Is that possible?

This is probably a dumb question, but I am just learning about purchasing notes.

I have the opportunity to buy performing notes on seller financed SFH from a wholesaler I know. I am learning about the risks and working on due diligence. My question is how to get a credit report on the borrower? I am trying to figure out how I would get permission for it. Any advice would be appreciated.

@Jaysen Medhurst

I really appreciate you letting me kick this around.  It helps with my thought processes.

The main difference is that a true cash deal leaves all of the money in the property unless you refi out, whereas this approach gets me back $5-6K back each year.  I'm thinking that I may want to use this type of loan either for the down payment or kind of like a hard money loan to then refi out after closing.  I have been very conservative in the past and just can't bring myself to leverage very heavy.

@Stan Williams

That's what this place is for.  You can use rentometer to get an estimate on likely rental rates. It would make sense to contact some property managers for insight as well.  You may find them very helpful in helping you understand the market.

@Jaysen Medhurst

Thanks for the response.  I was having trouble tagging you.  You can see the details above.

@jaysen medhurst

I see it as a hybrid to a cash purchase.  I don't have trapped equity for as long.  Each month I make a payment, almost all of that payment comes back as available cash.  For example, a $60K loan would have a payment of about $550/mo.  All but $12 goes to principal.  That means each month, my cash returns to availability at a rate of $538/mo.

Kyle,

Here's a link to the BP calculator: https://www.biggerpockets.com/...