Not that I’m experienced enough to offer advice, but I do have a thought. And if I’m WAY off base, let me know.
By “liquidity” do you mean that the investor wants to be able to “pull the money out” quickly or at will?
If it is quickly, what about using the money to buy REO’s in need of repairs (of course, use a note to secure the money from the original investor, to gibe him.her securty, and good yield). Also, you can then create the original note for more than the purchase price, giving you funds for repairs etc.
Then, sell the home after repair “retail” with a newly created note that you sell at close, and pay off the original investor.
When you sell the newly created, “Seller financed” note, you can pay back the original investor, and pocket some cash yourself.
Perhaps even offer a nice “second” mortgage that you hold for a “Down payment replacement” or enhancer. This way you also get a monthly cash flow for yourself, even after the property sells. You can always sell the second later at a discount if you want to cash out as well.
Also, make sure that you “oops” let the original investor see the numbers on the “newly created” note that you sell. Once they see that Yield, they may want to stay in for the long haul?!?!?(more money to them, and to you)
Who knows, it may work, but either way, thier money is secure by the LOW LTV you offer, and the property itself.
Just my $.02
Jim IL
I want to put together a plan to use private investor money to buy SFH’s and sell on rent-to-own basis. I take title and the invesor gets a 1st lien note. I have Merle Wooley’s course on finding private money and will be using that as a model. A good friend of mine manages a portfolio for several physcians and has sole discretion of their funds that is well into seven figures. The only real stumbling block I’m hitting is liquidity. Merle said it just always “worked out” because he usually had unused funds in his escrow account. I may have only a few investors the first year or so and I will not be able to offer any real assurance of a return of funds within a short period. I will be offering 9% interest on a 5 yr ballon. One of his clients has 900k sitting in a money market at 3% because he wanted to pull out of the market. So I have a very good source of funds, just need to find a way to structure a plan to offer some level of liquidity. Any thoughts would be appreciated.
You could create a first note at the 75-80% mark that would be pretty liquid, depending on factors, such as Down payment, credit, payment history on this note.
I would then wrap the note with a contract for Deed, AITD, etc.