Why create a note and discount it with your income and credit? You should have no trouble getting motivated sellers, partners, or even a local bank to carry a short-term first mortgage while you rehab and then flip. I would think that the cost of discounting a note that has no history (seasoning) is going to be more expensive then closing costs at your local bank. I have similar income and credit and have established a relationship with a local bank for financing. They have all my paperwork on file and processing a loan is quick and easy. I usually just have to update my account information and give them the facts on the purchase. If I show them that the numbers are right on cash flow or on the flip, they are ready to loan with minimal delay…
Posted by Kevin Subbert on January 20, 2001 at 05:06:23:
I want to be able to use note buyers as a way to acquire properties. Is it possible to pre-qualify myself to see what type of loan, how much of a discount, what rate, etc.
Maybe Im not wording it correctly. I want to be able to buy a house without going through a bank and still be able to cash out the seller. If the seller wants 70,000 I want to know how to set up the note to achieve this.
OK here is a possible scenario. SFH needs 20000 in repair. ARV of 140,000. Seller wants 70000 cash. So I would like to create a 1st mortgage that, when purchased, would cash out the seller and possibly get me some cash at closing to help with the repairs. The house in its present condition is probably only worth 100K so that may be unreasonable but I dont know, Im pretty green.
Since the LTV is already favorable, Im assuming the seller wouldn’t have to carry a 2nd. Would I need a down? What would the interest rate be?
I have a FICO of about 700. My income is about 100k/yr excluding REI, and I have about 60 or 70K in equity in other properties, if that matters.
I want to be able to jump on the phone at the drop of a hat and have the assurance that I can fund a specific deal.
It would be a very powerful tool for me to have, to say the least.