All Forum Posts by: Liz Brumer-Smith

To all the Canadian investors out there. What industry websites do you use to determine the crime rate and demographics of the area? I have great resources I use here in the USA but am having trouble identifying if an area has high crime, if the economy is stable or in general which areas are desirable vs. less desirable. Thanks in advance for any resources or insight you can share on this!

I'd have to agree with both @Logan Hassinger and @Chris Seveney here on vendor management and deal flow. I've started new sources of lead funnels, but it takes a lot of active management and I have to consistently work on it right now. I'm also not super pleased with some of my vendors as of lately. I just fired one company, and I feel like my legal in FL hasn't been handling a foreclosure well at all. 

Also, BK is really challenging as you're kind of in Limbo when the borrower, who has no ability or interest in paying, uses it as a stall tactic. We have two very friendly judges that have now prolonged our foreclosure for over 8 months in PA, and 14 months in FL (she filed twice there). Not a dime has been paid to the trustee or us, yet we haven't been granted motion for relief. It baffles and frustrates me.

Great topic! I think everything you mentioned @Chris Seveney about the risks with value, condition, borrower difficulties, and potential lien/title issues nailed it. 

I've been investing in CFD's for about 2 years now and had some out of the park home runs - I'm taking like 300% return on my money and some I've lost on because when we took the property back it was in such bad condition. We've rehabbed some and put a tenant in place, rehabbed some and created a new CFD on the backend. The cool thing is most of the time there is an alternative exit strategy that will still lead to profitability in the long run.

I do definitely suggest proceeding with caution, but if you know what to look for and know your value threshold you should typically end up with decent deals!

@Adam Johnson I would second what everyone is saying about the yield threshold. They do exist, but you may have to be flexible or be okay buying a note at a higher yield that has more risk. I would also suggest networking with other note investors. Most will have performing loans in their portfolio which means they may be open to selling partials. It sounds like you found a decent amount of potential sellers here, but I would continue to network outside of Bigger Pockets, attend conferences, etc. to meet more active note investors. I too sell partials and performing loans, so please feel free to direct message me if you're interested in chatting further. Best of luck!

@Jaroslaw Karbowski I would agree with @Brian Ploszay in trying to get the lowest possible downpayment, purchase price, and interest rate for the financing. That's definitely an ideal scenario! If the seller is experienced, he or she may request a higher interest rate, or less flexible terms - the point is, it's unlikely you'll be able to get the perfect storm for financing like above. 

It's really going to come down to you coming up with the terms that make it a profitable deal based on the seller's needs and desires. 

First and foremost, I would find out why the seller is selling. What is his/her pain? Why do they want to do owner financing? Do they want a large downpayment or a certain cash amount for a specific reason, or is the downpayment not as important as the price per say? Find out what they really want and cater your offers toward that. 

If they want a higher price - maybe you could do a lower interest rate or pose it so you have 0% interest loan (you obviously don't tell them it's 0% interest) but make an offer that gives them a decent monthly payment each month at their purchase price with a balloon in year 5 or 7? They get their ridiculous purchase price and you get a 0% loan.

What about if they want a high interest rate like 8% - 10% or more? Then maybe you do a 0% downpayment, or get them to come down in their purchase price dramatically ensuring there is no pre-payment penalty.

The point is - we can't tell you the perfect way to structure the seller financing deal because it depends on who the seller is, what their pain is, and what they want from this transaction! 

Let us know if it pans out please and what ends up happening with the terms. - Liz

You can find them the same way you would a cash deal. Look for properties or sellers in distress. Sometimes there are owner financing opportunities in the MLS or direct mail campaigns. A lot of experienced investors ready to retire understand the benefits of owner financing. You just have to approach them. Worst they can say is "no".

I would agree, try buying one at a time. You're brand new to investing and it will help you gain experience while you learn and work through owning a property and a rental. However, if it's a great deal and the opportunity to buy is now, you do have the option of getting a "blanket loan" where you can get 1 loan at 1 interest rate for all four parcels. There are banks that lend based on the pro forma of the asset itself and while you still need to qualify, they look at the asset more than they look at you. I would agree not to merge. Another benefit of keeping them separately parceled, is that you can sell them off as needed if you want to in the future rather than having to sell all 4.

Good luck!

Hey @Account Closed! 

Good for you for getting your ducks in a row. In regards to your original question about a quality mentor and a quality attorney...

Finding a good attorney: What type of attorney are you looking for? You don't really want a "jack of all trades" but someone who can advise you in your specific area of investing. I have another attorney I go to for all of my foreclosure or creative financing needs. I have an attorney I use in FL for my contract law, he reviews all contracts, writes agreements for me, and can help with closing but he cannot or chooses not to advise my on syndications, or foreclosure law as it's not his area of expertise. When that happens, he refers to me someone who is specialized in that area. I would start by figuring out what you need or want from an attorney, and possibly go to your local REI to get recommendations from others on who they use for what.

There are great attorneys in FL - so keep looking.

In regards to the "gurus" or mentors: You need to have a firm understanding of what you're getting with their mentorship or program. Some "gurus" offer education only - with no guidance or mentorship which sounds like this is less of what you desire. Correct me if I'm wrong, but it seems you're looking for an actual mentor; someone you can go to with specific questions relating to creative deals, structuring of offers, etc. There are mentors out there that offer this - but it will come at a cost. You're either willing to pay it or not. That's okay if you don't see the value, but that doesn't mean there aren't good mentors out there for you.

I think part of the issue is what you're expecting to get out of the mentorship or program. Most gurus or mentors aren't going to work on a "you get half basis" because if you don't get the deal closed, they just advised and assisted you for free. Typically, people who offer educational services have extensive experience and knowledge in their field, and are in the position to get paid for their advice wether it be through a program or hourly. Taking a risk on someone they don't know being the sole negotiator and liaison between a payday for them or not is risky. 

Again, I suggest going to your local REIA and getting acquainted with the other investors in the area. Many times the REIA will have recommended mentors that their members have worked with, or you can chat with others to find out who they've learned from. While you can find people who will teach and work with you on a 50/50 deal it's likely not going to be the ones advertising in youtube or social media.

Hope this helps! Keep on going - you seem motivated and enthusiastic so I'm sure you'll do well!

Hi Jeff! 

Getting creative with seller financing is so fun! You have the option to chose the terms to meet the yield you desire.

While there are certain things you can do to create a "good note" or rather a more marketable note in regards to the terms, it really comes down to what you want out of the note.

1. How much money do you have invested into the property at this time? Knowing this number will help you calculate your yield based on the P&I payment.
2. Is your goal cash flow? If so, what amount do you want or need each month to meet your desired yield?
3. Who is your buyer? *It makes a difference if they are owner occupant vs. an investor
4. Make sure your interest rate won't be seen as "predatory lending" - keep it reasonable for a private loan, in the 7% - 9% range, although you should consult your MLO to make sure you are complaint with the state or legislative guidelines.
5. Get a good downpayment - this often shows a stronger equitable interest and likelihood to perform over the life of the loan.
6. Balloon or no ballon that is the question: While balloons increase the ROI of your overall note, there is always a risk that they won't perform. You have to determine if you want one or not.
7. Term or Length of Loan: Longer is typically better, you collect more interest! We suggest at least a 15 year loan, but there is nothing wrong with going longer.
8. Are you going to sell the note eventually or do you want to keep it long term? If you want to sell the loan you have to think about it from the perspective of the note buyer. When will you want to take this to the market? Understand what they're looking for so you know you can get a good rate when they buy the note from you!

We ALWAYS recommend using a licensed mortgage originator (MLO) to create the note and mortgage. They should keep you compliant with all state and federal regulator rules and can ensure the loan is being created and underwritten to the proper guidelines. If you can't find always make sure an attorney helps you draft it. Also make sure you know before hand if you're servicing the loan, or paying someone to do it for you - as that where payments will be sent. Also, will you have it escrowed? 

Lastly, having quality paperwork when it comes to sell is important. Keep good records of payments (and we recommend using a third party servicer such as FCI for a nominal fee), and make sure you always keep the originals safe! 

Hope this helps! :)

Liz from Note Investing Academy

It sounds like you want to wholesale a bank property, is that correct? It is possible if the contract says and/or assigns or specifically states the contract can be assigned. It's likely the bank will be working with a realtor and they will use the state regulated sales agreement, which will have a box to indicate if it can or can't be assigned. Just make sure you have the permission so you don't lose the deal!