Can I Create A Note To Fund A Rehab? - Posted by Big Harold

Posted by Terry Vaughan on June 09, 2005 at 17:33:23:

  1. As I say in my classes, and I believe in my course “Paper Into Gold”, you must package the note with three sections: (A) People, (B) Paper, © Property.

Each section should give information that will satisfy the note buyer that it is a note worth buying.

  1. Hook up with a good note broker. They will tell you what you have to package to make the deal sellable. I use Ron Dahlke, here is his number: (707) 966-5016

But have your act together before you call him.

  1. This concept has become known as a “Similtanious Closing” type of deal. There are many companies arround the country doing these notes. The numbers have to be right for it to work, so do your homework first and “tweek” the numbers to make it marketable.

Can I Create A Note To Fund A Rehab? - Posted by Big Harold

Posted by Big Harold on June 08, 2005 at 15:30:23:

Hello again,

I have an old post from the articles section, written by J.P. Vaughan, titled “How To Create Your Own Mortgage.” The article talks about creating a mortgage with 11% interest, 6 months prepaid, and giving a discount on the note to bring in a 20% yield. It all sounds fine and dandy, but my question is, where do you find someone to buy this? I’ve been shopping this note I created, with these exact details, on the note buying networks to no avail. Anybody ever have success with this?

In fact, I’d love it if J.P. Vaughan could answer it. It does sound like a great idea, just need to know who’s buying it. Thanks.

Harold Wilson
Real Estate Investor Extraordinaire

Re: Oddball paper - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on June 09, 2005 at 08:04:09:

I just love it. A lot of note buyers can’t even read it especially if they are new to the biz’ (never did it before), or if there is not a computer program for it.

First figure out who might want to buy this paper, and then create it. How about:

Your brothers self directed IRA?

His childs educational savings IRA?

Any person who just has cash on hand and wants to make a more logical return on investment?

There are lots of possibilities.

Yes, a great idea. - Posted by gerald(tx)

Posted by gerald(tx) on June 08, 2005 at 21:10:23:

But in real world, rarely happens. I remember that article. Makes for good La La Seminar fodder, but doubt if you would find anyone who would actually buy it.

GP

There are few takers for such “paper” - Posted by Michael Morrongiello

Posted by Michael Morrongiello on June 08, 2005 at 20:04:30:

Harold:
We purchase Notes as principals and will look at just about any Real Estate secured deal that makes sense.

We have been in business since 1983.

Michael Morrongiello
www.sunvestinc.com
Author of the Unity of Real Estate & “paper” study course

Re: Yes, a great idea. - Works Too! - Posted by Terry Vaughan

Posted by Terry Vaughan on June 09, 2005 at 24:54:12:

That article was written because of the many deals we did using that concept.

If you think that was just “Makes for good La La Seminar fodder” then check out the link below to see what is really possible:

But don’t you try it, I’m sure it won’t work for you.

Re: Yes, a great idea. - Works Too! - Posted by Bob

Posted by Bob on June 10, 2005 at 03:33:17:

Two questions on ss-234: how does a $265k note fund a $287k acquisition, and how were the improvements financed?

Re: Yes, a great idea. - Works Too! - Posted by Big Harold

Posted by Big Harold on June 09, 2005 at 10:21:25:

I think this is great, but where in the world do I go to find these people to buy the notes? As you said in your article, it’s a very attractive investment for someone, so why wouldn’t they buy it? Anyway, if you could direct me to some sources or how to find them, that’d be greatly appreciated. Thanks.

Harold Wilson
Real Estate Dude

Re: Yes, a great idea. - Works Too! - Posted by Terry Vaughan

Posted by Terry Vaughan on June 10, 2005 at 13:08:08:

Bob:

Stuart had approximately $100,000 cash from his earlier deals which he planned to use as rehab money.

As I recall, I suggested to Stuart that he make the note for approx. $400,000 to allow for the rehab money he needed, leaving the cash he had from his other properties in reserve for surprises.

Stuart elected to keep the note as small as possible, to keep the payments down (after they began, six months later) and instead use the cash he already had to complete the purchase and then use his remaining cash and the cash flow he was creating with each new completed rental to complete the total rehab.

Hope this gives you a better picture of the deal.