Hypothecation, How to? - Posted by PBoone

Posted by PBoone on May 24, 1999 at 18:54:26:

Thank you for the info. I have solved the problem on the first wherein the escrow officer is willing to allow MY buyers money pay off the original seller in a simultaneous close and we will get a check and note for the difference at close.
The 31K 2nd note will be at 90%LTV “as is”. The rehabber will be putting his own money into the project for repairs so we should be sitting at about 50-60% after repairs are complete (approx 7 mos.)
I am aware of the possibility of “assigning” but I do like the idea of a little cash now and note (payments) @ 12% and being able to borrow at a lower interest rate to generate capital for other ventures.

Hypothecation, How to? - Posted by PBoone

Posted by PBoone on May 24, 1999 at 08:55:01:

We are in process of doing a simultaneous close on a 20 unit wherein we will be carryback a $31,000 note @ 12% I/O.
What are some good methods to generate spendable cash through Hypothecation? or is there a different way to consider?
Another thought!!!
We intend to borrow “Hard Money” @ 6pts to do the deal could we create a note and sell at closing and expect to recieve less of a discount? The value of the first position note $275,000

Hypothecation - Posted by John Behle

Posted by John Behle on May 24, 1999 at 18:31:39:

There isn’t enough data to tell whether the note is a very liquid note or not. If the LTV ratio, collateral and payor are acceptable (the 3 P’s - the People, the Paper and the Property), then this could be an easily saleable or bankable (loanable) note.

When a note isn’t real liquid in those ways, I use it to buy equities. I use it as collateral in a trade. Sometimes I do a little “lemonading” and throw a real soft note in with some other good ones as a paper trade or hypothecation deal. That way I realize almost full value for a soft note.

You didn’t say the rate on the hard money. It might be cheaper to create a note and sell it, but I would need more info.