If your flipping properties with Notes Beware! - Posted by Mark-NC

Real Estate Investing
#1

Posted by Mark-NC on March 23, 2001 at 07:46:49:

Michael,
I realize that there are others such as yourself that fund these type of deals. But this company is a major player in the business. The thing they had going for them was high LTV’s available and great buy rates. The reason I brought it up is many brokers use this company. And if they are used to structuring their deal for this company they may get caught with their pants down if they are setting up something to close with them soon.

There certanly are others out there that will do these type of notes but most at only an 80% LTV with a substantial discount even on stronger buyers. That makes it very hard to put together a deal in many cases.

I really do not want to name the company out of curtesy to them. All I am saying is if any one is doing flips using notes make sure they check before you go to close or find alternate sources for your note.

Mark

#2

If your flipping properties with Notes Beware! - Posted by Mark-NC

Posted by Mark-NC on March 22, 2001 at 12:29:14:

I just heard, starting today that 1 of the major note buyers that let you flip properties using notes is no longer allowing it. They are requiring 3 months seasoning before they will buy the note.

They are also requiring a letter from the payor stating that everything is ok before they will fund.

So beware and check with your note buyer before you try to close that deal.

Mark

#3

Not all funders are the same… - Posted by Michael Morrongiello

Posted by Michael Morrongiello on March 22, 2001 at 21:41:01:

Brian Mac / Mark :
We’ve been buying “paper” as a principal for over 15 years, we have NO such requirement that a note HAS to be seasoned. Clearly a quick “Flip” deal is inherrently far more risky than a seasoned note with a payment history established however if the deals make sense and are equitable for all parties then we will consider them.

Note funders in general are “tightening the reins” just like many of the conventional and sub prime mortgage lenders are these days.

This is a function of past losses and their simply being prudent. They see a slowing economy, and they have experienced large losses in the past from unscupulous sellers, note brokers, rehabbers, etc. who do “flip” type deals. To many promoters of these deals were overzealous to put the deals together rather than focusing on creating “SAFE” paper. Its too bad, A few bad apples spoil the bunch for everyone. Unfortunatly many note funders and lenders are painting many “flip” deal transactions with the same broad brush or disinterest.

Can a seller financed note be sold if a property is quickly purchased and then resold at a higher sales price? SURE, if certain ground rules are followed and with the right funder…

To your success,
Michael Morrongiello

#4

Which buyer? (nt) - Posted by Brian Mac

Posted by Brian Mac on March 22, 2001 at 17:32:22:

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