Re: Creating a note/ Newbie At Large!!! - Posted by Judy Miller - American Note
Posted by Judy Miller - American Note on March 15, 2000 at 10:35:52:
The key question for you is whether or not you need to get your cash investment, and perhaps some profits, out right now, or whether you can or want to wait.
If you want your cash out now, then you could sell right now and carryback owner-financing. You can then sell this financing, if properly structured in order to maximize your VALUE, at the closing of escrow.
If you elect to do this, then you want to make sure the buyers put enough downpayment into the closing so that they are more than just renters in appearance, and in intention. Few investors like to see someone come in with such a low downpayment that they have nothing to lose other than a “rent deposit”, in concept, if they walk away.
In previous posts, and if you contact our office, we have provided and can again give you the offsetting factors to consider if you are considering owner-financing. There are some basics you want to consider before taking back paper. These include payor’s credit, amount of downpayment, terms of the note you are creating, most particularly interest rate, so that you receive the best value, least discount on the paper you create to keep or sell, now or later.
What is good to remember, you do not have to lease option first in order to then provide owner financing when the buyer exercises the option, unless you find that a personal economic advantage.
And if you do lease option, and if you provide any rent credits as credit toward the downpayment, please make those rent credits “reasonable”, not the whole rent payment. “Sweat equity” is looked down upon, if excessive, in crediting toward a downpayment, unless it is specifically detailed in time and cost of supplies.
There are lots of little pointers. Please feel free to contact me if you would like some more advice.
Best Wishes, Judy Miller, President