All Forum Posts by: Richard Allen

We are buying houses using cash. We then lend money to the end buyer via owner financing.  This method becomes a little more difficult to execute with private financing, but it is doable. I have seen other investors use hard money financing to purchase homes that are similar to the ones I mention, and then owner-finance the home to an end user.  The new loan sits in the second position and is referred to as a wrap.  When they sell the loan that they originated, the first loan is paid off and the new loan moves up to the first position.  The investor keeps the delta between the payoff on the first loan and the sales price on the second loan. 

I love that the rates are up.  It's causing cash buyers in the real estate sector to sit on the sideline.  It's uncovering opportunities for investors who have a background in both real estate and mortgage note investing.  If you can buy cash, originate owner financing, and place it with a loan servicer like BIFI, you can sell the note with substantial returns.  At least that has been my experience over the last couple of months. 

Over the past 6 months, I've noticed a significant chance to purchase discounted real estate and sell it with owner financing. I see a unique market situation that offers substantial returns without the need for bank lending. Due to the FED's rate hikes, retail buyers' purchasing power has decreased significantly. As a result, cash buyers are sitting on the sidelines and are hesitant to invest in fix-and-flip deals due to the risk of losing money or being stuck with the property.

I believe that owner financing is the solution to these problems. However, I should note that not all real estate investment deals are suitable for owner financing, although most of them meet the criteria. I see an opportunity right now to buy clean houses and provide owner financing to buyers who may not be "bankable" but have significant income and large cash down payments. I'm referring to deals where traditional investors would typically invest in fixing up the property with new kitchens, bathrooms, floors, and paint, but they pass because the price is too high, and they fear a downturn. These are homes that have newer roofs and AC systems, are livable overall, and could be classified as "Scratch and Dent."

There are two key factors to consider, the rent in the area and how much can you sell the note to create liquidity.  Once those two factors are established, it's very easy to execute and make insane returns in very short periods of time.  Aiming for elevated rents in undervalued markets usually means high-interest rates on the originated loan (think 8.5% - 9.5%).  These higher rates make it much easier to sell the note on the back end. 

Happy Investing

@Michaela McCoin All great replies here for you to read.  Tons of knowledgeable experts already on this thread and their advice is sound.  I love the numbered list that @Chris Seveney laid out for you, it's a nice checklist of items you need to know. 

A great way to learn the business is to partner up with a reputable investor that is already executing trades.  Pairing your capital with seasoned investors and earning while you learn can be advantageous, to say the least. 

Good luck. 

Wow is right Brett.  Thank you all for your support.  Please let us know if you have any enhancements that we can add to the development cycle to make the platform better. 

A vacant secured reverse mortgage, borrowers deceased. Heirs want closure, willing to sign a consent to foreclosure, which means that the timeline to sale is very short. 

Value on this 3/2 unit is approx $120K. Recent inspection shows clean and vacant. Gated community.

Check it out here

@Chad U. Thanks for mentioning Paperstac.  We are happy to have you as a champion for the platform. 

I will echo what @Tracy Z. Rewey said, use an RMLO.  It's so inexpensive to keep you in compliance, there is no reason not to be safe. 

My motivations have changed significantly since 2012 when we started buying notes.  Initially, we started purchasing notes because it was a cheaper way to buy houses with less competition.  During that time, Blackstone and the other big reo buyers were paying 100 to 110% of value for assets at the auction, we used notes to get out in front of those buyers.  Our goal, take the house back or sell it at auction, never giving the borrower a chance to catch up on the loan or modify.  

Fast forward to today, we try at all costs to keep the borrower in the property and get them paying again. Our motivation now is to manage with a double bottom line, investing for economic returns as well as positive social impact. 

 That last website leads to a spam site now. Might want to check that out so nobody else ends up over there.