Posted by Michael Morrongiello on October 13, 2003 at 19:30:47:
I am not sure what mean by same “rules”…? Creatively using “paper” to get into and out of properties allows for a lot of different deal structures.
If you were to ask me to consider the purchase of a Property sellers newly taken back 1st lien Mortgage & Note where the property was purchase as an investment, it was also in VERY poor condition, the proposed Note payor did not have any of their money at risk in the form of a down payment into the deal, and there was NO history of how the Note was to be paid - I would say that just about any PRUDENT investor would consider this type of a deal to have a fair amount of RISK associated with it…
However what if you bought this home for $20K +/- you only had to put down $2K in cash, the sellers agreed to take back (2) two Notes- a 1st lien Note that could be sold to generate an additional $8K - $10K in cash to them at the time of closing (which is close to 50% of their asking price in cash to them at the time of closing) and then the rest to be repaid to them later on down the road AFTER you have rehabbed the property and sold it, refinanced it, or lease optioned it, etc.
This type of structure becomes far more palatable.
So, the possibilities are utilizing “paper” with Real Property can become limitless as long as the investor (like Sunvest) who is being asked to purchase the “paper” can be comfortable that they will be repaid and are adequatly secured.
To your success,