Posted by Michael Morrongiello on January 25, 2002 at 24:08:00:
Robert:
It looks like you may have a potential deal here. Where you need to “tweak” your thinking and deal structure is as follows:
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The prospective payor credit on the seller financed Note does not have to be sterling,BUT should not be very sub-standard. Look for several active open trade accounts paid as agreed, also look for credit scores around that 600 range or better…
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The low interest rate of 8% is TOO low on a seller financed Note to be amortized for 360 months (30 years). Don’t get me wrong, you can finance buyers are ANY rate you wish to, even ZERO interest, etc. - BUT if you goal is to convert this “paper” into a lump sum cash payout at some future point in time, then you need to boost that Note interest rate into the 10% + range…
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Sell your prospective buyers on the fact that there are NO points, NO application fee, NO lender junk fees, NO PMI premiums to be paid, and NO prepayment penality. - They can decide whether to stay with the seller financing your’re offering them or attempt to refinance after 12 months + to the VERY lowest interest rate they may be able to qualify for…
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With the right deal structure, buyer, down payment, and other important variables, there is NO reason the seller financed paper you take back cannot be sold at the SAME time your property is being sold.
To your success,
Michael Morrongiello