Re: Dealing with loan broker - Posted by Brent_IL
Posted by Brent_IL on October 15, 2003 at 17:28:44:
Well, IF you get a good enough deal in the first place, and IF you can sell partials on the second carry back, you could possibly purchase your deal with no money down or get money back when you close.
The challenge you will have is selling the partials easily. This is where the full plethora of CRE purchasing techniques comes to bear. There are fewer sellers that sell free-and-clear properties on terms than there are sellers who have underlying loans. Your carry-back second is going to sit on top of the other liens, so the LTV isn?t going to be that great.
Your buyers will be proven during the time they were on the lease, but in a typical L/O the T/B?s are stretched. The down payment notes are called throw-away seconds for a reason. In case of default, the cost of taking care of the first and reacquiring the property is usually greater than the value of your note. Buying a partial will give a note buyer a better ROI, but it won?t increase his safety margin. Unless property values are appreciating at a rate of one or two percent a month, a note with an LTV above 90% is worth very little to a note buyer, perhaps, 5% of the balance?
If you can find a way to package your notes to make them more appealing, you might be able to cash out.
Pulling this off is not an easy task.