All Forum Posts by: Nicholas Arcidiacono

A non-recourse note does not allow the lender to pursue anything other than the collateral. For example, if a borrower defaults on a non-recourse home loan, the bank can only foreclose on the home. The bank generally cannot take further legal action to collect the money owed on the debt.  

Here are the typical process:

1. Negotiate the Terms- Agree on a selling price, down payment amount, interest rate, and length of the loan term. 

1. Hire an attorney to draft the legal documents and ensure your interests are protected. This includes the promissory note and mortgage or deed of trust.

1. A title company or closing agent will handle the closing process like recording the mortgage or deed of trust and getting the proper deed.
   

1. Set up a payment schedule and automatic bank drafts. Late fees should be outlined in the promissory note.  Make sure no prepay penalties if payoff early.  Try to get a non-recourse note if possible.  

@Nicholas Arcidiacono

The amortization schedule is just the "amortization schedule."  You should be able to download a table off the internet...  There are excel calculators for it...  That will help you determine how much principal is paid per monthly payment.

Yup, if the buyer defaults, the prior owners would then choose to exercise their right to foreclose.  All those legal and associated headaches come into play.

Does that help?

@Nicholas Arcidiacono

In short, its really the same as a "regular" transaction, but now the the financing is coming from the seller -- they are like the bank.  So, the paperwork is pretty much the same except now you owe the "seller" instead of the "bank."  You were giving out a "IOU" to somebody, but now its to the seller.

One will generally need a lawyer to draft up a Note and Mortgage (or Deed of Trust).  

Hope that really short explanation helps.  

@Nicholas Arcidiacono

We will be posting under events a webinar on seller financing taking place on the 30th (free) and will be discussing all of this

Here's a couple questions you should ask yourself before you take a decision:

1. Can you get financing for the next property at a good rate? Check if you can secure a loan with better terms than the adjustable-rate HELOC.

2. Are there other financing options out there? Look for alternatives that might give you more favorable terms.

3. What's the potential return on investment for the next property? Consider whether it outweighs the risks and costs of keeping the HELOC.

You can decide if paying off the HELOC is worth it or if it's better to keep those funds for your next investment. Personally, I would just jump into my next investment property and not worry about the cash flow being eaten right now as there's also appreciation you're not taking into account. That goes up alongside inflation on these rates so you're really not loosing much by paying that interest. Those are just my thoughts on this. Hope it helps!