All Forum Posts by: Jimmy Farag

That's all I know for now. Obviously, most of the time
the mortgagee's credit, etc. comes into play, but in this case the LTV is so low it hardly seems to matter.

Assuming the paperwork is in order, what would you say is the market value for this note?

It is not just loan to value, it is the second loan to the first loan and total loan. Is there any interest on the note? Is it a house or a commercial property? The first and second mortgage are 185k, how was the remaining part paid? was it in cash or other fund source? There are so many questions to be answered before you can get an answer on that questoin

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Originally posted by "SellerFinance":

Robin,

This should be helpful to you...

In order to estimate the rate of discount known as the "Yield", there is a basic formula you can use that deals with 5 main factors:

1. Equity
2. Credit Score
3. Payment History
4. Months of Seasoning
(These four factors provide a "Score" used to apply against the Type of Note)
5. Type of Note

First you want to "Maximize" the value of your note. Steps on how to do this can be found on my web site. Go to my profile to find out my web site address.

Using your situation, let's see what we come up with:

Instead of 10K, your buyer gives you a 20% down payment which would be 6K. If the value of the property matches your selling price, then the Equity is 20% (the equity would be higher if the appraised value is higher)
So, [b]1. Equity 20% = a score of 35
[/b]
Next, what is the buyers credit score...I would not even consider anything lower than 600.
600+ = a score of 16
650+ = a score of 18
700+ = a score of 20
So, let's say the buyer has a 650
2. Credit is 650 = a score of 18

Next, payment history - because there is no payment history the buyer receive a flat score of 14.
3. No payment history(new note) = a score of 14

Next, months of seasoning (consecutive payments) is less than 4 so the score is "0". The more seasoning the higher the score.
4. Months of season less than 4 = a score of 0

Let's add 1 - 4. (35+18+14+0 = 67)

67 gets a letter score of "A"
75- 84 would be a "AA"
85 or higher would be "AAA" (the best)

Provided that the property will be owner occupied a yield of 20% is a reasonable expectation.

Your question about the rate of discount changing based on the amount of the note: No, the rate of discount normally does not change. In this case, provided all the factors remain the same except the total note value, you could still reasonably expect a 20% discount rate as long as the equity percentage remained constant - always get at least 10% down.

Varies from note buyer to note buyer - it can. For example, a recent new note that I brokered for a client got this range of offers.
It was a 100K note with over 50% equity and great credit.
The LTV was 32% - very good
interest 6%, but should have been 8% - 9% for maximum selling value
term was 120 months - short terms are better
No seasoning or payments made yet
The following is a "Net" quote range (no closing costs for note seller)
$75,000 - $83,303 (Yes it can vary)

This has been an abridged process. If I can help you anymore, let me know.

I'm not sure if the moderator will allow the link I provided for some instruction. If not, PM me. Add me to you colleagues.

Luke

I really love this example, it is clear and easy and i can't add anything else. Good job :)

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Originally posted by "Boab64":

Does it vary widely from note buyer to note buyer, ie does it pay to shop around or does shopping around lose you credibility?

Robin

Sometimes it does vary from note buyer to another depending on how much risk note buyer is willing to take. But i don't think it will be a wide difference.

I do recommend if you want to sell your note to get 3 different quotes, it is like you get 3 bids on house repairs.

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i found that Omni Bank has a program to lend rehabbers. Has anyone tried that program? what do you think about it?

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Hi all,

which one is better and have more response, letters or postcards? or there is no difference.

My other question is, does anyone know a good and cheap/reasonable site for mailing? or do you use the USPS?

Thanks

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What i understand when i find a property and start the closing process that i have to find a buyer who will pay the final amount. But what i don't know how much time do i have to find the buyer? in case that i couldn't find a buyer, do i have to get a loan??

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I think that property that you were talking about and i thought the same thing to buy it and wholesale it. but i stopped because it's been listed there for a while and i am pretty sure that there are investors who came across it. I haven't looked at it either.

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The value of the note depends on many factors, property type, interest rate, down payment, balloon payment if any, and the credit score. We don't usually expect the credit to be good, otherwise, the buyer would have been approved for a loan, but we still like to know the credit score as part of the valuation. Notes are like houses, each one has its own story and issues.
If you have a note and wants to know how much it would worth, i would be more than happy to help you out.

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Well, I am an accountant in a CPA firm and I started working on mortgage notes around a year ago. And I am planning to have the mortgage notes as a service to my clients when i start my small CPA firm which is free to the client as i either buy the note, or find the investor (for the bigger notes) and i just get referral fees from the investor, so the note seller doesn't have to pay anything.

Let's go back again to the note investment, i have started reading, learning and doing a lot of homework in this business couple of years ago and i worked on 1 big note(over 500k) and 2 other small notes. It doesn't sound that many but working on each note was a great experience. That's the reason why I am here because i want to focus more on the networking, specially that my business has no constraints to location.

Also, i am interested in wholesaling, which will be my next step to get more involved in real estate. i found a huge amount of information in the forum here that i need to copy to my computer to put them together in one file.

Thank you all for all your valuable information and i hope to do great business with y'all.

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Hi all folks,
I am Jimmy Farag, I live in Houston, TX. I am buying mortgage/promissory notes anywhere in the states. Any type of notes (residential, commercial, mobile homes, etc..).

I am really happy to be a member in this great forum.

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All Forum Posts by: Jimmy Farag

Jimmy Farag has started 18 posts and replied 36 times.

Post: Valuing a note

Post: Buying notes - rates of discount

Post: Buying notes - rates of discount

Post: Omni Bank Finance

Post: Letters or Postcards?

Post: what is the time frame of a wholesale

Post: How To Put A Home Under Contract When It's Bank Owned?

Post: Note Valuation

Post: New Mortgage note investor in Texas

Post: New Mortgage note investor in Texas